|Indian stock markets had a weak outing today as persistent selling activity across index heavyweights kept them well below the dotted line. There was no respite in the final trading hour either as the indices closed well into the red. While the BSE-Sensex closed lower by around 365 points (down 2%), the NSE-Nifty closed lower by around 113 points (down 2%). The BSE Mid Cap and the BSE Small Cap were also at the receiving end as they closed lower by 2% each. Losses were largely seen in banking, IT and metals stocks. |
As regards global markets, Asian indices closed in the red today while European indices have also opened on a weak note. The rupee was trading at Rs 47.16 to the dollar at the time of writing.
Engineering stocks closed in the red today with the key losers being Blue Star, Voltas and Larsen & Toubro (L&T). As per a leading business daily, Voltas, who is a market leader in the air-conditioner market, has downsized its earlier sales target of 1.2 m pieces to 1 m pieces this fiscal. This has been attributed to a short summer, inflation and the prospect of a slowdown in the economy. That said, the company is not looking to cut down prices of its ACs despite lower demand and high inventory build-up in the industry. Voltas' unitary cooling products division had recorded an impressive growth of 37% YoY during FY11, while sales from this division in 1QFY12 fell by 4% YoY. It must be noted that the Indian AC market has estimated sales of about four m pieces a year. For Voltas, about 40% of the contribution comes from North India. Further, about 65% of the sales come from split air-conditioners and the rest from window ACs.
Auto stocks also closed weak today with the key losers being Ashok Leyland, Tata Motors (NYSE:TTM) and Maruti. Auto major Maruti is planning to recruit new permanent employees to replace the existing ones who had gone on strike and had thereby disrupted production at the company's Manesar plant. In this move, the company has garnered the support of the Haryana labour authority and its parent Suzuki Motor Corp. (OTCPK:SZKMF). With no sign of an end to the stand-off that started on August 29, the company has decided to give the current workers time to sign the 'good conduct bond' failing which it would replace them with new workers. For Maruti, the agitation by the workers could not have come at a worse time. Given the rise in fuel prices, interest rates as well as raw material prices, the Indian auto industry is already feeling the pressure of a slowdown. This was evident in Maruti's 1QFY12 performance as well, as sales during the quarter declined by 1% YoY, while operating margins remained stagnant at 9.5%.
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