Late buying fuels indices

Indian stock markets languished in the red for the larger part of the trading session today on the back of relentless selling pressure across index heavyweights. However, the afternoon session saw buying activity picking pace. Sustained buying in the later hours ensured a positive close for the indices. While the BSE-Sensex closed higher by around 82 points (up 0.5%), the NSE-Nifty closed higher by around 27 points (up 0.5%). The BSE Mid cap and the BSE Small cap also notched gains of 0.5% and 0.3% respectively. Gains were largely seen in auto and metals stocks.

As regards global markets, Asian indices closed in the red today while European indices have also opened weak. The rupee was trading at Rs 52.93 to the dollar at the time of writing.

FMCG stocks closed mixed today. While P&G Hygiene and Dabur found favour, Godrej Consumer and Marico closed into the red. Marico announced results for the fourth quarter and year ended March 2012. Revenues increased by 22.8% YoY led by an underlying volume growth of 13%. All the three business divisions reported robust double-digit growth during the quarter. During FY12, topline grew by 28% YoY. Input cost pressures eased which enabled the company to overcome higher promotional spends and staff costs. EBIDTA margin expanded by 130 basis points during the quarter. However, operating margin for FY12 declined by 120 basis points. In 4QFY12, earnings were down by 2.7% as the year-ago results included extraordinary income of Rs 755 m as compared to exceptional loss of Rs 18 m in the current quarter. For FY12, the earnings increased by 10.5% backed by lower taxes and modest rise in depreciation and interest expenses.

Exide also announced results for the fourth quarter and year ended March 2012. The company recorded a 16% YoY growth in revenues during 4QFY12. Sales were largely led by higher volumes in the auto battery space. Volumes in the 4-wheeler and 2-wheeler segments increased by 7% YoY and 26% YoY respectively. The company's industrial battery segment reported a volume growth of 15% YoY. Exide's operating profits declined by 9% YoY during the quarter as costs increased by 22% YoY (as compared to a revenue growth of 16% YoY). The company's operating margins declined by 4.1% YoY on the back of higher raw material costs and other expenses. Exide's profits declined by 13% YoY on the back of a poor operating performance coupled with lower other income. Other income includes dividend from subsidiaries and investments. Higher depreciation charges also added to the woes. The stock closed higher.

Indian stock markets remain depressed
01:30 pm

After a negative opening, Indian stock markets continued to trade deep in the red in the last two trading hours. All the sectoral indices are trading negative with realty, banking and FMCG stocks being the biggest losers.

The BSE-Sensex is trading down 246 points and NSE-Nifty is trading down 94 points. Both BSE Mid cap index and BSE Small cap indices are trading down by 1.5% and 1.3%, respectively. The rupee is trading at 53.3 to the US dollar.

Majority of the large IT stocks are trading negative with Info Edge and Infosys being the biggest losers. As per a leading financial daily, IT major Infosys filed 50% higher number of patent applications in FY12 on a year-on-year basis. The company was granted 47 patents by the United States Patent and Trademark Office out of the total 143 filings in FY12. Infosys, also, jacked up its R&D spends by nearly 100% to US$ 140 m during the year. The company plans to double the strength of its engineers in the Product Research and Development Centre in India to 1,000 by 2014. Infosys in its guidance note has said that it is working on a new model wherein products and platforms would contribute 30% to its revenues. Reportedly, the company is working on 10-12 products in supply chain, healthcare and other areas.

Most of the mining stocks are trading negative with Gujarat NRE Coke and MMTC being the biggest losers. According to a leading financial daily, Coal India Ltd (CIL) has included some clauses in the fuel supply agreements (FSAs) to make sure it avoids penal provisions in case of a default in supplies. The company has been forced into signing FSAs with the power developers. However, the power developers have refused to sign FSAs with these insertions. The new draft FSA provides a mere 0.01% penalty in case of supply shortfalls. Besides, it proposes reasons like breakdown of equipment, failure of contractors to deploy machinery or spare parts, issues regarding transportation of coal, shortage of explosives and even power cuts to be good enough to release CIL from liability to perform its obligations under the pact. Hardly a quarter of a total of 48 FSAs that were supposed to be signed for power plants commissioned till December 2011 have been inked till now. CIL stock is down 0.8%.

Indian stock markets continue in red
11:30 am

Indian stock market indices continue to trade weak over the last two hours of trade on back of heavy selling activity witnessed across industry heavyweights. realty and banking stocks witnessed maximum selling pressure.

The BSE-Sensex is down by 278 points, while the NSE-Nifty is down by 86 points. BSE Mid cap index and the BSE Small cap index are down by 1.52% and 1.14%. The rupee is trading at 53.35 to the US dollar.

Engineering stocks are trading weak led by Suzlon Energy and Thermax Limited. According to a leading financial daily, Larsen and Toubro (L&T) has selected Keolis SA of France as an O&M contractor for operating and maintaining the Hyderabad Metro Rail System (HMRS). L&T which was awarded the 71.16 km HMRS, has decided to involve Keolis during the formative stage of the project in order to take advantage of the French company's expertise in metro rail operations and maintenance. Keolis, a subsidiary of the SNCF Group, is a leading public transport operator in Europe, Australia and North America. The company is stated to be a pioneer in the operation of driverless metro. L&T has decided to execute the works in phases to partly operationalise the project even though the company had a mandate to complete it in five years.

Telecom stocks are trading in the red led by ITI Limited and Reliance Communications. According to a leading financial daily, Idea Cellular was the biggest beneficiary of the mobile number portability (MNP) as on March 31, 2012. Idea Cellular has added the maximum number of subscribers at (3.32 m) followed by Vodafone (2.89 m) and Airtel (1.21 m). Reliance Communication, Tata Teleservices and state run Bharat Petroleum Corporation Ltd. (BPCL) and Mahanagar Telephone Nigam Limited (MTNL) were the companies who massively lost out, as consumers ported out of their service. MNP service was introduced by the government in January 2011 to enable customers change their telecom service provider without changing their existing number.

Banks drag down Indian stock markets
09:30 am

Asian stock markets have opened the week on a weak note. Markets in Japan (down 2.6%), Singapore (down 1.7%) and South Korea (down 1.7%) are leading the losses in the region. The Indian stock markets have opened the day on a negative note as well. Stocks in the banking and realty sectors are witnessing maximum losses.

The BSE-Sensex is down by around 242 points (1.4%), while the NSE-Nifty is down by around 74 points (1.5%). Mid and small cap stocks are trading in the red as well with the BSE Mid cap and BSE Small cap indices down by around 1.6% and 1.2% respectively. The rupee is trading at Rs 53.59 to the US dollar.

Textile stocks have opened the day on a negative note with Eastern Silk Industries, Pioneer Embroideries and Grasim Industries leading the pack of losers. Aditya Birla Group controlled Grasim Industries has announced its results for the quarter and financial year ended March 2012. During the quarter (4QFY12), the company's standalone net sales stood at about Rs 13.9 bn, witnessing a marginal decline of 2.6% year-on-year (YoY). Operating profits declined by 53.3% YoY to almost Rs 2.2 bn. as all cost heads witnessed upward pressure. There was some relief on account of 27.5% YoY rise in other income which stood at Rs 1.5 bn during 4QFY12. Interest expenses and depreciation charges declined by 44.7% YoY and 12.6% YoY, respectively. At the bottom-line level, net profit dropped by 38.4% YoY to Rs 2.4 bn during the quarter. During the full financial year (FY12), while sales grew by 7.3% YoY, net profits remained almost flat.

Engineering stocks have opened the day on a negative as well with Jain Irrigation, Jyoti Structures and Cummins India leading the losses. India's largest engine supplier for three-wheelers, Greaves Cotton, plans to diversify. The company plans to manufacture diesel engines for both the passenger cars as well as for light, medium and heavy trucks. The company's Managing Director has stated that they have approached several passenger car manufacturers for this and plan to enter the space in a big way in the next three to four years' time. Currently, the demand for diesel powered passenger cars is hovering at its all time high. This is largely on account of the huge differential in the prices of petrol and diesel. Several international companies like Suzuki, Hyundai as well as Honda are all getting into the compact diesel engine segment.

Double digit growth: Dream or reality?

These days the media seem to be filled with all negative news as far as growth in the Indian economy is concerned. Most of the industry experts are increasingly painting the grim image of the future. True, the county has witnessed a slower growth during the last financial year 2011-12. And, it may not be able to witness a high growth during the current fiscal FY13. However, now experts have started lowering down the long term growth rate of the country as well. They do not see India growing at double-digit pace in the future.

Why are they thinking like this? Simply, because all the economic indicators that we are used to see to gauge the financial health of a country are not in the good shape at the present moment. India is still battling with high inflation. Chances of monetary easing do not look bright considering the expected high petroleum prices and stubborn food prices. Then, the country is in the state of policy paralysis. The political and corporate landscape is abuzz with corruption news. In the last fiscal year, the country has missed its budgeted fiscal deficit target by a huge margin. And for FY13, the situation looks equally bleak on the deficit front. High crude prices would only increase the trade deficit. And all these negatives seem to be the reasons for the bleak projections by the experts.

However, look deeper and you may find something to think differently. First let's take politics. The Indian voters are no longer in a mood to vote on the basis of caste and religion. They are looking for development. Bihar is a good testimony for the same. Uttar Pradesh has voted for a young leader who they expect can put the state on the development path. This is a clear sign that people of India are thinking differently. They are aiming for a better future.

Then on policy issues, reforms have been on a slower pace for long. But issues such as new land acquisition bill and consensus building on Goods and services tax (GST) seem to be on the right path. State governments are raising their tax efforts. Investments in infrastructure and power are happening. Though there are delays in the project executions due to inadequate fuel supply arrangements and clearances. However, with the increasing power generation capacity, rural landscape would start contributing more to the growth of the country.

And not to forget, with the financial and economic crises in the developed world, high inflation and tight monetary environment, corruption and policy paralysis, India managed to have nearly 7% growth during FY12. With the improvement in all the parameters, days of better growth cannot be ruled out.