Lacking direction...

Repeated attempts by the bulls in the final hour of trade today proved futile as they were met with equally strong selling pressure. On the back of weakness in index heavyweights and profit booking in sectors like software, pharma and steel, the indices ended the day in the red. However, banking, auto, cement, energy and FMCG stocks witnessed selective buying.

The BSE Sensex closed at 6,463 (down 2 points) and the Nifty closed at 2,025 (no change). The rupee was trading at Rs 43.75 per US Dollar.

After having snapped a three-day losing streak yesterday, the markets began on a firm footing today. However, similar to the trend being witnessed in the recent past, investors are refraining from showing sustained commitment with respect to their equity investments, as they continue to book profits at every rise. Taking advantage of the strong gains yesterday and an equally firm start today, investors opted to take some profits off the table. This has led to some volatility on the bourses in the recent past. This investor behaviour could largely be attributed to the wait-and-watch approach seemingly adopted by them as they ready themselves to face corporate India's results. Thus, considering this, a clear trend would emerge only after the results season is over.

Cement major, Gujarat Ambuja, made a move contrary to the broader markets today. The stock was in significant limelight today, which can be gauged from the fact that while the benchmark indices closed in the red, Gujarat Ambuja ended the day with over 4% gains. The optimism towards the stock was seemingly a factor of the news that the company would consider a stock split as well as a bonus issue in its board meeting that will be held on April 20. The company in its release to the BSE made this announcement. Apart from this, the company's March quarter results (3QFY05, as the company is a June ending company) and an interim dividend would be considered on the same day. Among its peers, while Ultratech (2%) and ACC (1%) closed in the positive, Madras Cements (down 1%) ended the day with losses.

Auto stocks ended the day's trading on a mixed note. While the gainers included Ashok Leyland (ASOK.BO, news) , Maruti and Tata Motors (up 1% each), Hero Honda (HROH.BO, news) (down 2%) led the losers pack. Selling in Hero Honda was seemingly a fallout of the mixed http://www.equitymaster.com/detail.asp?date=4/12/2005&story=4 FY05 results announced by the company late yesterday. For the fourth quarter of FY05, while revenues are up 16% YoY, profits have dipped 2%, mainly due to the effect of higher input costs. For FY05, topline and bottomline have grown by 27% and 11% respectively. With prices of inputs like steel, rubber, plastics etc. on the rise, operating margins and hence the net profits of the company have been adversely affected. The situation is further aggravated due to the company's inability to raise prices on account of fierce competition. Though raw material prices have weakened from their highs, we expect margins to remain under pressure at least in the near future.

Bharti Televentures, which recently dethroned Reliance (RELI.BO, news) Infocomm as the company with the highest subscriber base, became the first private telecom player to complete a nation-wide network across all 23 circles at an investment of Rs 15 bn. The company has announced an additional investment of Rs 4 bn for the current fiscal to expand operations. The company has started focusing on expansion of fixed line telecom services eyeing a major pie of the broadband segment. Bharti plans to cover 0.3 m villages by 2005-06. The company's subscriber base stands at 12 m currently and it expects it to reach a mark of 50 m in a couple of years. While Bharti and VSNL lost about 1% each, MTNL (MTNL.BO, news) closed in the positive (up marginally).

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