Auto stocks lead the gains

Fri, 10 Feb 09:30 am

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Asian stock markets have opened the day on a mixed note. Stock markets in Indonesia (down 1.4%), South Korea (down 1.2%) and Hong Kong (down 0.6%) are leading the losses in the region. However, markets in China (up 0.4%) and Malaysia (up 0.1%) are trading in the green. The Indian stock markets have opened the day on a positive note. Stocks in the auto and capital goods sector are leading the pack of gainers. However, realty and technology stocks are witnessing selling pressure.

The BSE-Sensex is up by around 45 points (0.1%), while the NSE-Nifty is up by around 12 points (0.2%). Mid cap and small cap stocks are trading in the positive zone as well, with the BSE Mid cap and the BSE Small cap indices up by about 0.6% and 0.8%% respectively. The rupee is trading at Rs 49.69 to the US dollar.

Metal stocks have opened the day on a good note with Tata Steel, Sterlite Industries and Bhushan Steel leading the gains. Tata Steel has recently reported its third quarter results for the financial year ended 2011-2012 (3QFY12). The company reported a 14% YoY growth in consolidated net sales. However, higher raw material costs caused operating profits to decline by nearly 50% YoY. As a result, operating margins declined sharply to 5.2% during the quarter as compared to 11.8% seen during the same period last year. The decline at the operating level led to a loss at the net level. The company has reported a net loss of Rs 68.7 m as compared to a net profit of Rs 94.9 m during the same period last year. The loss was mainly on account of the company's European subsidiary Chorus as demand from the region has seen a sharp decline.

Cement stocks have opened the day on a mixed note with Birla Corporation, UltraTech Cement and ACC leading the gains. However, JK Lakshmi Cement and Shree Cement are facing selling pressure. ACC has announced its results for the fourth quarter (4QCY11) and the full calendar year (CY11) ended December 2011. On a standalone basis, the company reported a sales growth of 28% on year-on-year (YoY) basis during the quarter (4QCY11). Operating profits surged by a whopping 86% YoY as operating margins improved from 10.7% in 4QCY10 to 15.6% in 4QCY11. The profit before tax (PBT) grew at a lower rate of 43% YoY on account of lower other income and significant increase in interest expenses. The tax expenses were negative during the quarter on account of adjustment of credit worth Rs 2,279.7 m arising from reversal of tax provision related to earlier assessment years. As a result, the net profits witnessed a rise of 83% YoY. Net margins improved from 13.1% in 4QCY10 to 18.8% in 4QCY11. During the full calendar year sales and net profits rose by 22% YoY and 18% YoY respectively.