Heavyweights weigh on the markets

Fri, 21 Jan 09:30 am

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Asian markets have opened today on a mixed note. Benchmark indices in China (up 1.9%), Taiwan (up 0.6%) and Hong Kong (up 0.3%) are the leading gainers. However, markets in Indonesia (down 2.4%), Korea (down 0.9%) and Japan (down 0.9%) are witnessing selling pressure. Indian markets have opened the day on a weak note. IT and metal heavyweights are dragging down the indices

The BSE-Sensex is trading lower by around 40 points (0.2%), while the Nse-Nifty is down by 2 points (0.04%). Mid and small cap stocks are however trading in the positive with the BSE Midcap and BSE Small cap indices up by about 0.3% each. The rupee is trading at 45.55 to the US dollar.

Auto stocks have opened in the red. Tata Motors, Maruti Suzuki and Hero Honda are the biggest losers. However, stock of Bajaj Auto is currently trading in the green. India's third largest 2-wheeler company, TVS Motor, has announced a strong set of results for the quarter ended December 2010. The company's net sales have grown by 50% YoY. This was led by a 39% YoY increase in total 2-wheeler volume sales. Its motorcycles sales volumes formed nearly 41% of the total volumes and grew by 40% YoY during 3QFY11. Sales of scooters on the other hand grew at a faster pace of 63% YoY and contributed to nearly 24% of total sales volumes during the quarter. Against the strong growth in the domestic market, TVS's exports did only reasonably well, with volumes growing by around 18% YoY. Anyways, the company saw some pressure on its operating margins on the back of higher raw material costs. Margins came down to 5.2% during the quarter, from 6.2% in 3QFY10. However, on the back of a 132% YoY growth in other income and a 47% YoY decline in interest costs, TVS' net profits surged by 137% YoY during the quarter. The stock of the company is seeing buying interest.

Engineering stocks are trading in the green. BHEL and Punj Lloyd are leading the pack. Punj Lloyd has announced that the company has received three oil and gas orders in India, Oman and Indonesia. The total worth of the orders is Rs 6.5 bn. The largest of the three orders is from Oman and is worth Rs 3.2 bn. It involves construction of a water treatment plant. The plant would generate steam which would then be injected into the oilfields to extract oil. The project would be executed over the next 27 months. The second order, worth Rs 2.7 bn is from Indonesia. It involves the construction of three well-head platforms and laying of three segments of offshore gas pipeline. The third order is worth Rs 5.1 bn and is from Indian gas and transmission major GAIL. With these orders, the cumulative order book of Punj Lloyd now stands at Rs 294 bn.