India Markets Monday Wrap-Up: Volatility Plagues Indian Indices

by: Equitymaster

Indian equity markets had a rather volatile trading session today. The indices began on a weak note and languished in the red throughout the morning session. Buying activity did pick up post noon and pushed the indices into the green. However, this was brief as profit booking at higher levels once again took toll. There was no respite in the final trading hour either and the indices closed below the dotted line. While the Sensex today closed lower by around 31 points, the NSE-Nifty today closed flat. The BSE Mid Cap and the BSE Small Cap, however, bucked the trend and closed higher by 1% each. Losses were largely seen in FMCG and auto stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 55.62 to the dollar at the time of writing.

Auto stocks closed mixed today. While Maruti Suzuki and Mahindra & Mahindra (OTC:MAHMF) found favour, Tata Motors (NYSE:TTM) and Ashok Leyland closed in the red. As per a leading business daily, Maruti Suzuki reported a strong 20% YoY growth in sales for June 2012. This was led by a 19% YoY rise in domestic volumes, while exports were up 27% YoY. Total passenger car sales in the domestic market increased by 23% to 70,977 units. In this, growth was largely seen in the compact segment (including Estilo, Swift and Ritz), as volumes were up 39% YoY. Similarly, Dzire also witnessed a stupendous growth in sales to 13,741 units in June 2012 from 2,486 in June 2011. Other segments saw a fall in sales. For instance, the company's mini segment cars saw volumes drop by 10% YoY. The mid-sized sedan SX4 sales slipped 43%, while the luxury sedan Kizashi witnessed 81% fall in sales. It must be noted that FY12 was a challenging year for Maruti as the labour strike at Manesar, higher interest rates and fuel prices all combined to put immense pressure on the company's overall performance.

Pharma stocks also closed mixed today. While Glenmark, Lupin and Ranbaxy (OTC:RBXZF) closed firm, Sun Pharma and Dr. Reddy's (NYSE:RDY) were at the receiving end. As per a leading business daily, pharma major Dr.Reddy's has launched Ibandronate Sodium tablets in the U.S. market. These tablets are the generic version of Roche Therapeutics Inc's (OTCQX:RHHBY) Boniva tablets and are used for the treatment of post-menopausal osteoporosis. The Boniva brand and generic had sales of nearly US$ 486 m in the U.S. during the twelve months ending March 2012. This is a positive for the company and will enhance sales from the highly competitive U.S. generics market. The generics opportunity over the next three years is big and Indian pharma companies including Dr. Reddy's have a slew of product launches lined up to capitalise on this trend. Having said that, competition will also be high and price erosion on the higher side.