India reflects weak Asia

Wed, 13 Jan 09:30 am

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Carrying on with yesterday's weakness, Indian markets have opened today on a weak note. The benchmark indices opened below the breakeven mark and have not managed to break into the positive territory since then. Asia is currently trading in the red with Hong Kong (down 2.4%) leading the pack of losers. The US markets closed lower by 0.3% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading in the red with metal and banking stocks leading the pack of losers. However, the software heavyweights are in the green. The BSE-Sensex is trading lower by around 70 points, while the NSE-Nifty is down by around 15 points. Selling is being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading lower by 0.3% and 0.2% respectively. The rupee is trading at 45.67 to the US dollar.

Auto stocks have opened the day on a mixed note. Gainers here include Bajaj Auto and Maruti Suzuki. However, TVS Motor is in the red. Bajaj Auto announced its December 2009 quarter results yesterday. The company's topline grew by 57% YoY during the quarter. This was on the back of a strong 64% YoY growth in volumes. The company was able to sell 72% more number of motorcycles than it had sold during the same quarter last year. This was significantly higher than the industry growth rate of 32%, thus enabling the company to increase its market share to 27% from 22% in 3QFY09. Operating profits jumped by 137% YoY as the company achieved record operating margins of 22% during the quarter. While the quarter witnessed an increase in cost of raw materials and components on a sequential basis, greater economies of scale and effective cost management enabled Bajaj Auto to maintain margins. With depreciation charges remaining benign and extraordinary losses coming in lower as compared to same quarter last year, the company has managed to nearly triple its net profits during 3QFY10.

Software stocks have opened the day on a strong note. Gainers here include Infosys and Satyam. As per a leading business daily, Infosys has revised its hiring target for FY10 to 24,000 people, from 20,000 earlier. The company is looking at more of local hiring given the continuing problems with H1-B visas. It will also serve staffing requirements from new acquisitions to be made this year. The company is also looking at parking about Rs 55 bn in mutual funds out of its current cash reserves of Rs 140 bn. Infosys expects spending in the telecom sector to pick up due to network expansion and emphasis on application stores. However, risks remain in the form of currency movement and dependence on large customers. Overall, the company is likely to benefit from the ongoing economic recovery.