Sensex ends week 1.4% higher

Despite selective buying interest in index heavyweights, weak economic cues from global markets coupled with mixed set of results kept the indices in Indian equity markets below the dotted line throughout the trading session today. The Indian indices in fact led the pack of losers in Asia. The gains over previous week's closing were, however, 1.4%. While the BSE-Sensex today closed lower by 120 points, the NSE-Nifty lost 45 points. Both the BSE Mid Cap index and the BSE Small Cap lost 0.5% each.

As regards global markets, Asian indices in the negative today while European indices have opened lower. The rupee was trading at Rs 54.34 to the dollar at the time of writing.

Axis Bank declared the results for the fourth quarter and financial year 2012-13 (FY13). The bank has reported 21% YoY growth in net interest income and 22% YoY growth in net profits for FY13. The growth in net interest income came on the back of 16% YoY growth in advances. Net interest margins (NIM) were at 3.5% in FY13, while NIMs for 4QFY13 (3.7%) were higher than that in 4QFY12 (3.6%). The average NIM over the past 5 fiscals has been above 3.3%. The bank's net profit growth was supported by 32% YoY growth fee income. Axis Bank's net NPAs remained stable at 0.3% of advances at the end of FY13. Plus the capital adequacy ratio (CAR) was also on firmer footing at 17% at the end of March 2013, Tier 1 capital at 12.2%. The board has declared dividend of Rs 18 per share.

Auto stocks closed mixed today. While Maruti Suzuki and Bajaj Auto found favour, Ashok Leyland and TVS Motors closed into the red. Maruti Suzuki has announced its results for the fourth quarter and year ended March 2013. During the quarter, the company reported a 13% YoY growth in the topline. This was largely led by good growth in its volumes of 'Dzire', 'Ertiga' and enhanced export realisations. Operating margins during the quarter improved by 7.7% to 15% and was on account of cost reduction and localization efforts and also due to a favourable exchange rate. This led to an impressive 133% YoY growth in operating profits. Net profits also grew at a robust rate of 94% YoY. However, this growth was lower than that in operating profits on account of higher finance costs and depreciation charges. For the full year, growth in revenues and net profits stood at 22.5% YoY and 46% YoY respectively. The Board of Directors have recommended a dividend of Rs 8 per share (dividend yield is 0.5%).

IT stocks lead the downfall
01:30 pm

Indian share markets recovered partially but continued to trade below the dotted line in the post-noon trading session. Barring auto and capital goods, all the sectoral indices are trading negative. IT, FMCG and oil and gas stocks are the major losers.

BSE-Sensex is down 46 points and NSE-Nifty is trading down 22 points. While BSE Mid Cap is down 0.4%, BSE Small Cap index is trading down by 0.3%. The rupee is trading at 54.2 to the US dollar.

Mining stocks are trading mixed with Coal India and Metals and Minerals Trading Corporation of India Ltd. (MMTC) being the major gainers whereas Manganse Ore India Limited (MOIL Limited) and National Mineral Development Corporation (NMDC) are trading in the red. Hindustan Zinc has announced its results for the quarter ended March 2013. The company's topline grew by 25% YoY led by 25% growth in zinc sales. Higher growth in output and better realizations in lead and zinc resulted in a 1.2% expansion in the operating margin during the quarter. At the net level, profits registered a 53% jump on the back of strong operating performance coupled with lower depreciation charges and significant fall in tax outgo. For FY13, revenues and profits were up by 11% and 25%, respectively. Hindustan Zinc stock is trading flat.

Most of the Telecom stocks are trading in green with Idea Cellular and Bharti Airtel leading among gainers. As per a leading financial daily, government-owned telecom service provider Bharat Sanchar Nigam Ltd (BSNL) has accused Bharti Airtel, Idea Cellular and Vodafone for forming a cartel in 2010 bidding auction for 3G spectrum. Reportedly Bharti Airtel, Vodafone and Idea are selling 3G services in circles where they do not directly hold licenses. These companies have entered into bilateral agreements called as 3G roaming agreements. Further, even the Department of Telecommunications (DoT) said that such agreements were in violation as per the license terms. DoT has also served notices on all the three companies and imposed fines on them. These companies approached the Supreme Court after a High Court verdict asked them to stop services in circles where they do not have licences. The Supreme Court hearing is scheduled for May 9. In a previous hearing, the Supreme Court had directed that Bharti Airtel cannot add any new 3G subscribers in the seven circles where it does not hold 3G spectrum.

Indian Equity markets remain in red
11:30 am

Indian equity markets have witnessed selling pressures during the previous two hours of trade. realty and consumer durables are leading the pack of winners while banking and IT have faced the maximum selling pressures.

The BSE-Sensex is down by 93 points and NSE-Nifty is down by 37 points. BSE Mid Cap index is trading down by 0.01% while BSE Small Cap index is trading up by 0.07%. The rupee is trading at 54.24 to the US dollar.

Energy shares are trading on a mixed note with Castrol and Gas Authority Of India Ltd. (GAIL) leading the gains while Reliance Industries and Chennai Petroleum are facing the maximum selling pressures. According to a leading financial news medium, state-owned Hindustan Petroleum (HPCL) has received its board approval for incorporation of a joint venture (JV) company to set up a Rs 373 bn oil refinery and petrochemical complex in Rajasthan. It is planning to hold a 74% stake in the 9 million tonne a year refinery with Government of Rajasthan taking the balance 26%. The unit is planned to go on stream in four years. The refinery will run on crude oil from neighbouring oilfields of Cairn India. A part of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported. Other than taking 26% stake, the state government has given in-principle approval for providing an interest free loan of Rs 37.3 bn per annum for 15 years from the date of commercial production. HPCL's share is trading up by 1.1%.

Pharma shares are trading on a mixed note with Elder Pharma and Natco Pharma leading the gains while Wockhardt Ltd and Biocon Ltd are facing the maximum selling pressures. Biocon has announced its 4QFY13 results. Revenue has grown by 7% YoY during the quarter and the below average growth in sales is largely due to poor growth in the Biopharmaceutical segment. However the domestic formulations and contract manufacturing segments has witnessed robust growth of above 30%. Operating margins has declined by 4.1% largely due to increase in staff costs. Margins have also been impacted due to higher licensing income in 4QFY13. On the other hand R&D expenses have been lower by 18%. Net profit has increased by 156% YoY during 4QFY13 due to an exceptional gain of Rs 2 bn during the quarter.

Indian share markets open weak
09:30 am

The major Asian stock markets have opened the day on a mixed note with stock markets in China (down 0.5%) and South Korea (down 0.1%) leading the losses. However, the stock markets in Hong Kong (up 0.9%) and Malaysia (up 0.6%) have opened in the green. The Indian share markets indices have also opened the day on a bleak note. The sectoral indices have opened on a mixed note with stocks in the auto and banking sector leading the losses. However, stocks in the metal and Godrej Consumer Products (GCPL) sector are witnessing gains.

The Sensex today is down by around 55 points (0.3%), while the NSE-Nifty is down by around 23 points (0.4%). However, the mid and small cap stocks are trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.1% and 0.3% respectively. The rupee is trading at Rs 54.16 to the US dollar.

Telecom stocks have opened the day mainly in green with Idea Cellular and Tata Teleservices leading the gains. Idea Cellular has announced its results for the fourth quarter of the financial year 2012-13 (4QFY13). The consolidated sales for the quarter witnessed a growth of 12.9% on a year on year (YoY) basis. The growth was mainly driven by growth in the subscriber base as well as by higher minutes on the network during the quarter. The operating margins for the quarter stood at 27.6%, as compared to 25.3% in 4QFY12. The net profits for the quarter were up 29% YoY with net margins at 5.1%. The growth was mainly on account of growth in voice minutes and high data usage. The company has recommended a dividend of Rs 0.3 per share. The company has ended the quarter with 121.6 million subscribers, compared with 112.7 million last year.

Auto stocks have also opened the day mainly in the red with TVS Motors and Hero Motocorp leading the losses. As per a leading financial daily, the country's second largest bike maker Bajaj Auto Ltd is in preliminary talks to get a controlling stake of 55-56% in Austrian sports bike company KTM. It plans to increase the stake within the current fiscal year. Bajaj Auto already has a 47% stake in KTM. The move is likely to give the company a larger global reach, especially in the higher margin premium bike markets of Europe. Bajaj will have to buy 956,529 shares for at least 51 m euro for the additional 8-9% stake, as per the share price of KTM at the Vienna stock exchange on Wednesday.

Reading the signs for global economy

If statistics are to be believed, the slowdown in the global economy seems like a writing on the wall. And it is not just Western economies suffering from a slowdown .Even emerging giants like China have seemed to catch the fever as seen from weakness in the manufacturing data. On the top of fundamentals deteriorating, the dragon economy is likely to be a victim to speculative forces as suggested by the rising property prices.

Things are not better for Western economies either. The earning season in the US has started on a poor note. The lacklustre data on housing recovery and job growth and weakening demand for imports in European Union is further disappointing for the US. On top of all this, the decline in the bond yields and even gold prices almost confirm that the global economy has hit a soft patch and is unlikely to come out of the woods anytime soon.

Having witnessed a slowdown for all these years, an interesting point is what should be the strategy going forward. Quantitative easing has not exactly helped the economies that seem to be increasingly indifferent to any such measures. That said, shift to austerity to overcome the downturn is not something that everyone seems to be convinced about.

Unfortunately, with increasing coupling among the global markets, it is hard to be optimistic about the future of the global economy, especially in the short term. As far as India is concerned, the fall in the prices of oil and gold are positive for the country's fiscal health. However, it is likely to witness some slowdown due to weakness in the global economic environment. While we can do little about the impact of external factors, it is time to bring in reforms and the focus on the urgency to implement them.