Autos drive gains in the Indian stock markets

Wed, 18 Apr 09:30 am

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Asian stock markets have opened the day on a high note. Nearly all the major markets are trading in the green with Japan (up 1.9%), China (up 1.3%) and Hong Kong (up 1.2%) leading the gains in the region. The Indian stock markets have opened the day in the green as well. Stocks in the consumer durables and auto sectors are the major gainers.

The BSE-Sensex is up by around 139 points (0.8%), while the NSE-Nifty is up by around 48 points (0.9%). Mid and small cap stocks are trading in the positive territory, with the BSE Mid cap and BSE Small cap indices up by around 0.9% and 0.8% respectively. The rupee is trading at Rs 51.43 to the US dollar.

Energy stocks have opened the day on a positive note with stocks of Gas Authority of India Ltd. (GAIL), Cairn India and Indian Oil Corp. (IOC) being the major gainers. Castrol India Ltd. has reported its first quarter of calendar year 2012(1QCY12). The company has reported 4.1% year on year (YoY) increase in the sales but the net profits fell by 10% YoY. The slowdown in sales growth is due to overall economic slowdown. The operating profits during the quarter were down 12.4% YoY, up 2% QoQ. The operating margins for the quarter stood at 20.3%, almost same as that in the previous quarter however were down verses the 24.2% margins in last year same quarter. The margins were down due to high cost of base oil and additives which is the main raw material for Castrol. The margins were further hit due to the rupee depreciation. At bottom-line level, the company registered an annual decline of 10.0% (up 15.1% QoQ). The net profit margins for the quarter stood at 15.7% versus 18.1% last year and 13.6% in the previous quarter.

Auto stocks have opened the day in the green as well with stocks of Tata Motors, Ashok Leyland and Bajaj Auto leading the gains. Maruti Suzuki has been facing a rough weather in terms of increasing its sales in India. 2012 has started on a dour note. The adverse currency movement, the higher royalty payouts and problems on the industrial front have all come together. The car sales for the company have gone down by 11%. However, there can be some positive news coming with the increasing sale of diesel cars and the launch of its new utility vehicle, Ertiga. The new car Ertiga can give significant thrust to sales as it is a car introduced in a new market category. If the new car becomes successful, it will be complementary to existing sales. Additionally the car can become a huge success as it is targeted to the mid-range segment in terms of price.