Indian Markets: Liquidity Insures Stability

In the final hours of trade, markets gained further ground and closed the day higher by 5% as compared to the previous close. Stocks from the realty, banking and consumer durables sectors garnered investors' interest, while selective selling pressure was seen in stocks from the alumnimum, software, pharma and auto sectors. On the global front, the Asian indices closed mixed, while the European indices have opened positive.

The BSE Sensex closed 500 points higher, while the NSE Nifty closed higher by 155 points. The BSE Midcap and Smallcap indices closed in the green, up by 4.8% and 4.3% respectively. The rupee was trading at 48.82 to the dollar.

Taking cues from global peers, Indian benchmark indices opened in the positive territory. The RBI's move to lower rates (CRR, SLR and repo) to further infuse liquidity into the system also boosted the overall sentiments on the bourses today. From thereon, markets remained range-bound as alternate bouts of buying and selling activity were witnessed.

Even though indices pared some gains post-noon session, they managed to close well above the dotted line on account of renewed buying activity witnessed towards the end of the trading session. The overall market breadth was positive with gainers outnumbering losers by a ratio of 5.3 to 1 on the NSE. While Reliance Infrastructure (up 20%) and Jaiprakash Associates (up 18%) led the pack of gainers on the BSE Sensex today, Satyam (down 2%) and Infosys (down 1%) were at the receiving end.

P&G announced results last Friday late in the evening. P&G reported a topline growth of 24.8% YoY during 1QFY09. Led by strong growth in Vicks, the health care business notched up 14% YoY jump in sales. 32% YoY increase was witnessed in feminine hygiene segment. The operating margins declined marginally by 0.9%. The bottomline jumped 43% YoY mainly on account of stable margins, higher other income and lower tax rates. The stock (up 4%), along with its peers Marico and Dabur (each up 1%), closed in the green.

Shoppers Stop announced results last Friday. The consolidated topline of the company grew by 25% YoY during the 2QFY09. The company has reported operating loss of Rs 6 m in 2QFY09 as operating costs grew at a faster rate compared to the topline. Besides reporting losses at the operating level, higher depreciation and interest expenses further aggravated losses at the net level (Rs 183 m).

The company has leveraged its balance sheet to fulfill its ambitious expansion plans. The company has also re-estimated the useful life of its assets. All of this led to the increase in interest expenses and depreciation charges. On the BSE Sensex, the stock along with its peer Pantaloon closed higher by 11%. Trent gained 2%.