Indian Markets Monday Wrap-Up: Banks, Metals Shed Gains

After putting up a strong performance in the last week, the Indian markets began this week on a bleak note. The indices bore the brunt of profit booking as they ended the day deep in the red. The BSE-Sensex closed with losses of around 460 points, while the NSE-Nifty closed lower by about 120 points. Stocks from the mid-cap and small-cap space ended the day in the red as well. Selling activity was witnessed across sectors led by banking and metals stocks.

Most other Asian markets closed on a weak note. The European indices are currently trading in the red as well. Rupee was trading at 51.1 against the US dollar at the time of writing.

Capital goods stocks ended the day on a weak note led by Suzlon Energy and Punj Lloyd. Engineering and construction (E&C) major, L&T has won a Rs 3.5 bn order from the Nuclear Power Corporation of India (NPCIL) for manufacturing and supplying four steam generators. The generators will run the 700 MW (megawatt) pressurized heavy water reactors being built by NPCIL at its plant in Gujarat. It may be noted that L&T’s peer, BHEL won a similar contract last week. As per the management, L&T is aiming to win new orders from power and atomic-energy companies to offset the slowdown in its parts making segment. During its 9mFY09 performance L&T’s E&C business contributed nearly 80% of the topline, higher by more than 5% YoY as compared to the corresponding period in the previous year. At the end of December 2008, the company’s E&C segment had an order backlog of Rs 670 bn, which is nearly 3 times its FY08 sales.

Banking stocks ended the day on a weak note led by ICICI Bank and Kotak Bank. As per a leading business daily, starting 1st of April 2009, banks will not be allowed to levy any charges on cash withdrawals made by customers of other banks using their ATMs. At present, banks charge around Rs 20 per transaction. This development may hurt the fee income of banks that have a large ATM franchise and used to garner a sizeable fee income through arrangement with other banks for use of their ATMs. At the same time, this move is a positive as it will save banks the cost of setting up ATMs in new geographies.

As per a leading business daily, Japan's industrial production sank by 9.4% in February compared to the previous month. It may be noted that the country recorded a 10% drop in the previous month as well. The reason behind this sharp fall in industrial production has been on account of lower demand for Japanese cars, electronics and other export goods, which are largely consumed by the developed markets such as the US and Europe, in addition to fast growing economies like China.

Comments

[DDate:]

A bad day all around.

Mar 31 09:54 PM