Earnings, global cues affect sentiment

Wed, 20 Jan Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

After starting off with reasonable gains in the early session, the benchmark Indian indices kept oscillating to either side of yesterday's close post noon. As the earnings reports of heavyweights in India Inc kept trickling in, selling activity intensified in the later hours. It finally caused the indices to close in the red. While the BSE Sensex closed lower by around 128 points (down 0.2%), the NSE Nifty lost around 4 points (down 0.1%). Midcap stocks were also at the receiving end, losing 0.4% while smallcaps ended flat. Losses were largely seen in IT, realty and energy stocks.

As regards global markets, while most Asian markets closed lower today, the European markets have also opened in the red. The rupee was trading at Rs 45.87 to the dollar at the time of writing.

The largest mortgage financer in the country, HDFC, announced its third quarter and nine month ended December 2009 results today. The institution grew its advances by 18% YoY during 9mFY10. These were on the back of 22% YoY growth in approvals and 23% YoY growth in disbursements. The gross and net NPAs remained at 0.6% and 0.2% respectively. The provision coverage ratio was 75%. Profits grew by 23% for both the quarter and the full year periods.

In what came as a relief to power equipment manufacturers in the country, the government has ensured that all the orders for future power projects comes to them, instead of going to foreign vendors. The government has approved a provision requiring such plants that will be awarded in the future to use local power generation equipment. The move, which is expected to provide a fillip to domestic manufacturing, comes after some serious lobbying by local power equipment makers. The decision on the ultra mega power plants or UMPPs will benefit domestic power generation equipment manufacturers such BHEL and L&T. Indian power equipment manufacturers had complained to the government against imports of power equipment from China, where manufacturers benefit from low interest rates and an undervalued currency which makes exports competitive.

Dr. Reddy's announced its 3QFY10 results a short while ago. Revenues during the quarter declined by 6% YoY largely due to 55% fall in revenues from North America. This was largely due to the absence of any 180-day exclusivity during the quarter, while the company had received the exclusivity window for the blockbuster drug 'Imitrex' in 3QFY09. A sharp fall in raw material costs and other expenses (as percentage of sales) led to the 3.3% improvement in operating margins during the quarter. Profit before tax grew by an impressive 33% YoY due to a considerable reduction in interest costs. There was a loss at the net level to the tune of Rs 2.3 bn on account of impairment of intangible assets and goodwill related to Betapharm. On excluding the same, net profits grew by 42% YoY. The stock closed higher by 3% on the bourses today.