Bank, PSU stocks weigh on markets

Mon, 2 May 11:30 am

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Indian stock markets continue to flounder in the red on profit booking in heavy weights over the last two hours of trade. Stocks from the banking and PSU space are trading weak while stocks from the realty and consumer durable space are trading firm.

The BSE-Sensex is down by 73 points while NSE-Nifty is trading 27 points below the dotted line. BSE Midcap index is down by 0.6% while BSE Small cap index is trading 0.5% below Friday's closing. The rupee is trading at 44.30 to the US dollar.

Retailing stocks are trading mixed with Titan Industries and Zodiac Clothing trading in the green. However, Shopper's Stop and Pantaloon Retail are witnessing selling pressure. Titan Industries declared its FY11 (financial year 2011) results. The company's annual sales have grown by nearly 40% led by 44% sales growth in jewellery. Sales from watches division have been muted through the year especially during the last quarter. The operating margins of the watches division have seen a fall of more than 4% over the last quarter while for jewellery , these have been consistently rising. Helped by lower interest costs and other expenses, the retailing company has posted net profit growth of 64% for the quarter and 72% for the year. Titan has been focusing on its jewellery business which now contributes 76% of the total company sales.

Titan Industries has declared a dividend of 250% along with a bonus issue in the ratio of 1 share to every 1 share held. The management also announced plans of stock split of one share of face value Rs 10 each into 10 share of face value of Rs 1 each. It may be noted that the stock is currently trading up by nearly 2%.

Paint stocks are trading mixed with Jenson & Nicholson and Akzo Nobel India trading firm while Asahi Songwon Colors and Asian Paints are trading weak. Kansai Nerolac declared its 4QFY11 results. The company's top line grew by 22.8% YoY. This was on the back of strong demand in both industrial and decorative paints. However, the management believes that top line growth will moderate, especially in the industrial segment due to an increasing interest rate scenario. Operating margin fell by 2.7% to stand at 11.2% for the quarter. This was due to commodity inflation. Over the last few months, prices of crude oil and related derivatives have increased significantly. This has led to a sharp increase in raw material costs pressurizing margins. Net profit of the company increased by 43.5% YoY during 4QFY11. This is higher than operating income and is a result of one time income from sale of stake in Nipa Chemicals Ltd., an associate company. When adjusted for this one time income, net profits for the quarter declined by 1.3% YoY.