No respite from selling pressure

Tue, 1 Feb Closing

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Markets languished in the red throughout the trading session today on the back of relentless selling pressure across index heavyweights. There was no respite in the final trading hour as well and the markets closed well below the dotted line. While the BSE-Sensex closed lower by around 306 points (down 2%), the NSE-Nifty closed lower by around 89 points (down 2%). The BSE Midcap and the BSE Small cap were at the received end as well as they raked losses of 1.6% and 1.4% respectively. Losses were largely seen in power, energy and engineering stocks.

As regards global markets, Asian indices closed firm today while European indices have opened in the green. The rupee was trading at Rs 45.78 to the dollar at the time of writing.

Barring Coal India, most power stocks closed weak today. The key losers were GVK Power, Neyveli Lignite, Reliance Power and NTPC. NTPC declared its 3QFY11 results. Net sales grew by 19% YoY during 3QFY11. Operating margins declined to 30.8% during the quarter, from 33.2% in 3QFY10. This was largely on account of higher fuel costs (as percentage of sales). Led by weaker operating margins, lower other income, and higher interest charges, net profit remained flat at 3QFY10 levels. For 9mFY11, while sales grew by 19% YoY, net profits were down 6% YoY.

As per a leading business daily, Tata Motors reported a 15% YoY growth in the sales of automobiles in January 2011. Passenger vehicles sales in the domestic market did well to grow by 15% YoY. As far as the brands are concerned, Nano did well during the month as sales grew by a robust 68% YoY. In the domestic commercial vehicles segment, sales rose by 12% YoY. While the sales of light commercial vehicles (LCVs) registered a growth of 17% YoY, sales growth of medium and heavy commercial vehicles stood at 5% YoY. Exports grew strongly by 51% YoY. Although demand for vehicles has remained buoyant so far, there could be near term pressures in the form of higher interest rates as the RBI has been tightening policy measures to bring inflation under control. The stock closed lower today.

Indian pharma stocks closed weak today with the key losers being Lupin, Cipla, Biocon and Glenmark. Glenmark announced its 3QFY11 results a while ago. Revenues grew by 17% YoY during 3QFY11 led by the robust performance of its speciality business. Growth in the speciality business was led by Latin America, which posted an impressive growth of 88% YoY. India, Europe and the Rest of the World markets also did well to bolster the performance of the speciality business. The generics business, however, was at the receiving end as sales grew by a mere 6.5% YoY. This was largely due to the lukewarm 8% YoY growth in the US generics business and the decline in sales from the Argentinean and API businesses. EBDITA margins fell by 3.3% due to higher raw material and staff costs (as percentage of sales). PBT growth at 38% YoY was stronger than the growth in operating profits due to reduction in interest costs and depreciation charges and higher other income. However, because of higher tax expenses, net profit growth slowed down to 16.5% YoY.