IT, banking stocks not in favour

Fri, 17 Jan 09:30 am

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The Indian stock markets opened the day on a positive note, but were quick to slip into the negative territory. The BSE-Sensex is currently trading lower by about 43 points or 0.2%, while the NSE-Nifty is trading lower by about 10 points or 0.2%. Stocks from the BSE Mid Cap and BSE Small Cap spaces have begun the day on a flat note. Information technology and banking stocks were amongst the tops losers while those from the metal and pharmaceutical spaces were in demand during the opening session.

Stock markets in other parts of Asia are currently trading weak with China and Japan down by about 0.6% and 7% respectively, while Hong Kong is trading higher by about 0.8%. The rupee was trading at Rs 61.53 to the dollar at the time of writing.

Stocks of auto companies are largely trading firm led by Hero Motocorp, Maruti Suzuki and Bajaj Auto. 2-wheeler major, Bajaj Auto announced its results for the quarter and nine month period ended December 2013 recently. The company's revenues declined by over 5% YoY during the quarter and remained flat during 9mFY14. However, its sales volumes declined by 12% YoY and 10% YoY respectively during these periods, thereby giving an indication of the change in product mix which led to a relatively lesser decline in revenues. At the operating level (adjusted for marked to market gains and losses), the company's profits were up by 3% YoY during 3QFY13 and 15% YoY during 9mFY14. Profit before tax came in higher by 5% YoY during 3QFY14 and 15% YoY during 9mFY14. At the net level, the company reported an 11% YoY increase in profits during the quarter ended December 2013 and by 9% YoY during 9mFY14. The rise in profits during the quarter was largely due to the marked to market fluctuations.

Information technology stocks opened the day on a weak note with Tata Consultancy Services (TCS), Hexaware Technologies and Mphasis being the top losers. IT heavyweight, TCS announced its results for the quarter and nine month period ended December 2013 yesterday. The company reported a revenue growth of 1.5% QoQ during the quarter. In constant currency terms, revenues were up by 3.8% QoQ. The company's operating margins fell by 0.3% QoQ to 29.8% during the quarter as compared to 30.1%. This led the operating profits rise to slow down to 0.5% QoQ. A sharp surge in other income (which came in at Rs 6.8 bn) led the profit before tax to grow by about 12% QoQ. A lower tax rate led the company's profits to rise at a sharper pace of 15.1% on a QoQ basis. The company's stock is however the top loser amongst those forming part of the BSE-Sensex.