India Update: Markets Barely In the Positive

Includes: EPI, IFN, IIF
by: Equitymaster

Though markets ended marginally in positive territory, they lost some ground during the previous hour of trade as uncertainty continued to prevail among investors. While selling pressure was witnessed across telecom, engineering and pharma stocks, auto, cement and metal stocks witnessed investors' interest. As regards global markets, the Asian indices closed in the green, while the European indices also opened on a positive note.

The BSE Sensex closed 36 points higher, while the NSE Nifty closed higher by 28 points. The BSE Mid cap and Small cap indices closed in the red, down by 2% and 1% respectively. The rupee was trading at 49.77 to the dollar.

The rise in US stocks yesterday, coupled with gains in the Asian markets led to a firm opening on the domestic bourses. However, volatility was witnessed in the sessions from thereon, as profit booking at higher levels began to take its toll.

Despite the indices paring considerable gains, they nevertheless managed to close in the green. The overall market breadth was negative with losers outnumbering gainers by a ratio of 1 to 0.8 on the BSE. While Hindalco (up 20%) and ACC (up 9%) emerged as gainers on the BSE Sensex today, Reliance Communication (down 11%) and DLF (down 8%) led the pack of losers.

SBI, India's largest bank, expects a loan growth of 26% during FY09 as against 23% recorded last year. It has also drawn an expansion plan for business growth that includes the addition of 1,500 branches across the country.

So far, the bank has opened 500 branches and is awaiting approval from RBI for the remaining branches. During 2QFY09, SBI made an appreciable effort to increase its market share in both deposits (16.1% in 2QFY09) and advances (16.0% in 2QFY09). The bank tapped its relationships with large corporates as well as retail.

It is also authorised to open 25 branches in the international regions where currently the bank has three branches. The bank is also planning to focus on retail banking and back-end operations on the international front, which would be handled from India. This will help the company increase its presence. The stock ended down 2%, while ICICI Bank ended up 4%.

Marico is planning to expand its skin venture, Kaya, further into Muscat and Saudi Arabia. The company is evaluating opportunities in countries such as Kuwait, Qatar and Egypt as well.

The overseas expansion by Kaya is aided by the fact that the flagship Marico also has a presence in markets like the Middle East and South Africa with the acquisitions it has made in these markets. Kaya currently has 11 skin clinics in the Middle East.

The move is in line with the company's strategy to expand its clinics to cross the 100 mark next year. Kaya currently contributes around 6% to the parent company's revenues. With the expansions, the company wants to increase the contribution from Kaya to revenues to a double-digit figure going forward. The stock ended down 3%, while its peer HUL was down 5%.