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Small, midcaps not in favour today
Mon, 7 Feb 01:30 pm

The Indian markets continued to trade above the dotted line during the previous two hours, albeit amidst a good amount of volatility. Currently, stocks from the FMCG, realty and oil & gas spaces are amongst the most favored, while those from the healthcare, consumer durables and capital goods are seeing some pressure.

The BSE-Sensex is trading higher by 70 points (up 0.4%) while the NSE-Nifty is trading higher by about 10 points (up 0.2%). Stocks from the mid and smallcap spaces do not seem to be in favour today as the BSE Small cap Index is down by about 0.4%, while the BSE Midcap Index is trading lower by about 0.7%. The rupee is trading at 45.58 to the US dollar.

Stocks forming part of the BSE-Healthcare Index are currently trading weak led by Ipca Labs, Dishman Pharma, Cipla and Ranbaxy. Aurobindo Pharma announced its results for the quarter ended December 2010 recently. The company's consolidated revenues increased by 30% YoY. Growth during the quarter was led by the company's formulations business which grew by 53% YoY and formed about 59% of revenues. The company's operating profits increased at marginally stronger pace (32% YoY) as expenses increased at a marginally lesser pace on a year on year basis. As a result, operating margins expanded to 26.8% from 26.5% during 3QFY10. Despite a strong operating performance, Aurobindo's profits grew by 16% YoY during the quarter. The key reason behind the same was lower forex gains. In addition, the company was also impacted by higher tax charges during the quarter. The company filed for 15 ANDA in the US during the quarter taking its cumulative filing to 200.

Banking stocks are mostly trading weak with Central Bank, Oriental Bank and Indian Bank leading the losses. However, Canara Bank and SBI have managed to find some favour. The country's largest lender, SBI has set a target to achieve rural business worth Rs 4.8 trillion by end of financial year ending March, 2011. Of this, Rs 3 trillion is expected in deposits and Rs 1.8 trillion in rural advances. At present, SBI's rural deposits stand at Rs 2.9 trillion and rural advances at Rs 1.6 trillion. The rural deposits constitute 36% of SBI's total deposits while 32% of the total advances went to villages. The bank extends credit to micro finance institutions (MFI) all across the country, except in Andhra Pradesh.

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