It made for a familiar setting on the markets today. After remaining range bound for most part of the day, indices lost some ground during closing hours, finally ending the day in the red. While the BSE Sensex closed lower by around 120 points (0.7%), NSE Nifty lost around 40 points (0.7%). Even BSE Midcap and Small cap indices were not able to buck the trend, ending lower by 0.5% and 0.2% respectively. On the Sensex, nearly 4 stocks declined for every one that gained.
Among Asian indices, while most of them ended the day lower, European markets are trading in the positive territory currently. The rupee was trading at Rs 46.8 to the US dollar at the time of writing.
Huge clouds of uncertainty have gathered on the horizon as of now. And unless they clear up, the markets may continue to move in a sideways fashion. The biggest of those clouds seem to be the runaway inflation in food prices. Worst monsoon since 1972 has resulted in severe shortfall of essential food items in India. And this in turn has led to their prices touching multi-year highs, forcing the RBI to have a hard look at the price trend and gear itself up for a possible hike in interest rates or some such monetary tightening measure. Since this could possibly put some pressure on the country's GDP growth, investors seem to be worried and rightly so.
Then there is another school of thought, which believes that the RBI's measures are not likely to be very drastic and hence, any impact on the GDP is going to be marginal at best. But even here, a blanket approach to investing may not be the most ideal, as the indices have run up quite a bit over the past few months. All in all, it appears like a stock picker's market until some clear trends emerge.
Watch and jewelry major Titan was in the thick of buying interest today. The stock ended one of the strongest amongst BSE-A group counters. The company has been somewhat of an underperformer over the last twelve months, returning in the region of 40%, as against gains of nearly 75% notched up by the Sensex. Its financial performance for the first half has also been nothing to write home about, with profits growing a mere 3% on the back of a 7% growth in topline. The future though looks anything but dull.
The company has outlined some aggressive plans in a couple of areas. Recently, it came out with an announcement that it is planning to open 20 more stores of its specialty eyewear chain "Titan Eye+" by the end of the fiscal and intends to make it a Rs 5 bn brand in three years. Besides, the company is also making a big foray into the premium priced watch market, in a bid to diversify its customer base in Middle East and Africa. These initiatives, in addition to its core areas of mass segment watches and jewelry, will ensure that the wheels of growth keep rolling at a fair clip.
Key losers amongst the BSE-A group stocks were aluminium majorsHindalco and Nalco. The selloff in these stocks was surprising given the fact that metal prices as well as demand is likely to go higher as one is about to enter the year 2010. Also ending lower were infrastructure finance companies like PFC and IDFC. Here again, it could be a case of stretched valuations and investors wanting to book profits than any other negative catalyst.