All indices in red

Fri, 4 Feb 01:30 pm

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Indian indices continued to drop further during the previous two hours as selling pressure intensified across all counters. Stocks from the IT and realty space are leading the pack of losers as of now.

Currently, the BSE-Sensex is down by 276 points while NSE-Nifty is trading 77 points below the dotted line. BSE Midcap and BSE Small cap indices are both up by 0.46% and 0.63% respectively. The rupee is trading at 45.63 to the US dollar.

Cement stocks are currently trading mixed with JK Lakshmi Cement, Madras Cement and Shree Cement leading the gains, while Chettinad Cement, India Cement and Ambuja Cements are witnessing selling pressure. Ambuja Cements has announced its results for the year ended December 2010. The company has reported a 4.4% YoY rise in consolidated net sales on the back of an 8% YoY rise in domestic sales volumes of cement. However, a reduction in average realisations played spoilsport. Operating costs increased by 6.8% YoY during CY10. EBITDA margins fell by 1.7% from 26.4% in CY09 to 24.7% in CY10. Net profits rose by 3.8% YoY in CY10. Partly, this was a result of an exceptional income due to the sale of an investment. Lower effective tax rate due to tax credit relating to earlier years also helped the bottomline. Hence, net profit margin remained almost unchanged at 17%. The board has recommended a final dividend of Rs 1.4 per share. Together with the interim dividend(Rs 1.2 per share), the total dividend for the year stands at Rs 2.6 per share.

The company’s annual cement capacity has increased to 25 m tonnes. This will increase further in 2011 to 27 m tonnes, following completion of additional grinding capacity.

Auto stocks are mainly trading weak with M&M, Escorts, Ashok Leyland and Maruti Suzuki leading the losses. However, Bajaj Auto is trading firm. With the annual Union Budget being announced later this month, discussions relating to the expectations from the same have started making rounds. A leading business daily has reported that the government may look at increasing the excise duties on automobiles back to the pre-slowdown levels, which would in turn increase by 2%. And with the same happening, price of vehicles will move up accordingly as the high commodity prices have already been impacting the profitability of almost all the OEMs. And as such, auto manufacturers will have no option but to pass on the hike to customers. This is one of the many factors that is looming the auto sector with the other key ones being higher interest rates, rising input costs and rising fuel prices. It must be noted that auto companies have already hiked prices by about 1.5 to 2 % to offset higher input costs in recent times. The auto companies would be hoping the concession to continue considering that it would help with the overall growth of the industry. Nevertheless, it would be interesting to see what decision the Finance Minister takes later this month.