Post Market Update

Selling in the index heavyweights continued steadily till the closing bell, thus ensuring a negative close for the markets. The Sensex closed lower by around 150 points, while the Nifty closed lower by 50 points. Stocks from the metal and software sectors led the pack of losers, while select stocks from the cement and banking sectors garnered inventors’ interest.
Other Asian markets ended the day on a mixed note. The European indices are also witnessing mixed trend currently. Rupee was trading at 49.49 against the US dollar at the time of writing.
As per a leading business daily, government is likely to issue oil bonds worth Rs 103 bn to oil marketing companies (OMCs) IOC, BPCL and HPCL this week to compensate for the losses they have incurred on fuel sales in last fiscal. It may be noted that the government controls retail prices of petrol, diesel, kerosene and cooking gas. The OMCs have lost about Rs 1 trillion in FY09 due to selling fuel below input cost. So far, the government has issued oil bonds worth nearly Rs 610 bn to these companies. Moreover, state-owned upstream companies - ONGC, Oil India and Gail have offered discounts worth Rs 320 bn to make up some of the losses. The proposed bond issue is expected to make good the losses of the OMCs and help them report better financials. Stocks from the energy sector closed mixed.
The stock of Shriram Transport ended the day trade firm, mainly on account of its splendid results reported for 4QFY09 and FY09. The company’s operating income recorded a growth of 30% YoY and 50% YoY during 4QFY09 and FY09 respectively. However, the proportionate interest expenses recorded a higher growth of around 52.5% YoY in FY09 that resulted in the fall of net interest margins. The operating expenses grew by 39% YoY in FY09. Net profits recorded a proportionally higher growth of 37% YoY and 57% YoY. The company has proposed a final dividend of Rs 4 per share along with interim dividend of Re 1 per share for the fiscal. This translates into dividend yield of Rs 1.9% at current prices.
Global car manufactures are eyeing the Indian market not only as a growth driver but also as a way to cut costs. World’s largest carmaker Toyota, Europe’s largest car maker Volkswagen, Japan’s Honda and America’s Ford Motor are planning to follow Maruti Suzuki’s strategy of launching hatchback and sedan variants for new launches. The move to use the same technology to make both big and small car models for their future projects in India is likely to reduce costs.