Marginally higher on a volatile day

Thu, 3 Nov Closing

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In what can be considered a mirror image of yesterday's trading, indices in the Indian stock market came off the day's lows during the closing stages and did manage to end past the breakeven line, albeit to a very small extent. Thus, while the BSE-Sensex managed to rake in gains in the region of 20 points, NSE-Nifty edged higher to the tune of around 10 points. BSE Mid Cap and BSE Small Cap indices failed to make changes to their previous closing and ended virtually flat. Advance to decline ratio on the Sensex was evenly split as one stock gained for every other that closed the day in the red.

While most stocks across Asia closed the day in the red, Europe is trading in the positive currently. The rupee was seen trading at Rs 49.3 to the dollar at the time of writing.

When the day started, most cues were pointing towards yet another off-colour day and the script did unravel as per the plan. However, the momentum reversed during the fag end of the day as news that European stocks are trading on a firm note made its impact felt on Indian stocks as well. Had it not been for news in the form of India's food inflation reaching its highest level in nine months, the indices would have gained further perhaps. Nevertheless, the markets are indeed testing the patience of long term investors but they should certainly not let this get onto their nerves if they want to profit from the India growth story.

TVS Motors announced its results for the second quarter and half year ended September 2011. The company's sales grew by a robust 23% YoY backed by a strong growth in volumes. Although the overall auto industry has witnessed a slowdown on account of the rising interest rates and fuel prices, it has been the passenger vehicles segment which has been the worse hit, while two-wheelers have managed to do much better. That said, although TVS Motors put up a strong show on the topline front, operating margins witnessed pressure as they declined from 7.6% in 2QFY11 to 7.3% in 2QFY12. As a result, operating profit growth at 19% YoY was lower than that in the topline. Bottomline growth, however, came in stronger at 40% YoY on account of reduction in both interest costs and depreciation charges despite a surge in tax expenses.

Steel major SAIL also announced results for the quarter ended September 2011. The company has reported 2.1% YoY increase in sales and a 54.6% YoY decline in net profits. Operating profit also declined by 13.9% as compared to the corresponding period last year. Both operating profit and net profit margins saw a decline of 2.3% YoY and 5.6% YoY respectively. The decline in net profit was a because of steep Rupee depreciation against both Dollar and Euro which resulted in foreign exchange fluctuation loss of Rs 5087 m as compared to a profit of Rs 1525 on short term foreign currency loans in the same quarter last year. Other income during the quarter grew by 30.6%.