Markets down on Asian cues

Wed, 4 May 09:30 am

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Asian stock markets have opened the day on a weak note on the back of profit booking by investors. Benchmark indices in Hong Kong (down 1.3%), Singapore (down 1.0%) and Korea (down 1.0%) are leading the losses. However, stock markets in Japan (up 1.6%) are witnessing gains. The Indian stock markets have opened the day on a negative note as well. Auto and technology stocks are leading the losses.

The BSE-Sensex is trading lower by around 149 points (0.8%), while the NSE-Nifty is down by around 33 points (0.6%). Midcap and small cap stocks are trading in the negative as well, with the BSE Midcap and BSE Small capindices down by about 0.4% and 0.2% respectively. The rupee is trading at 44.58 to the US dollar.

Pharma stocks have opened the day on a weak note. Dr Reddy's Labs, Cipla and Sun Pharma are leading the losers' pack. However, Ranbaxy and Ipca Labs are witnessing buying interest. Pfizer Ltd, a subsidiary of Pfizer Inc, has announced its results for the four months ended March 2011. (It is important to note that the company has changed its accounting year from December - November to April - March. As a result, the results are not strictly comparable.) For the four month period ended March 2011, the company reported a 9% YoY increase in sales over the same period last year. The comparable increase in net profits was 10% YoY. Sales growth was muted on the back of a lower growth in the sales of the company's Becosules product. As this product required higher value raw materials, consequently, lower sales led to lower cost of raw materials during the period. As a result, operating margins were higher at 22% during the four month period. Over the past few quarter, Pfizer has seen a better growth in its core pharmaceuticals business. Growth in this segment has been higher than that of the broader pharmaceutical industry.

FMCG (Fast Moving Consumer Goods) stocks have opened the day on a mixed note. ITC and Hindustan Unilever are trading in the negative zone. However, Dabur India and Nestle India are trading in the positive territory. Godrej Consumer Products Ltd (GCPL) has recently announced its full year 2010-2011 (FY11) results. The company reported a 78% YoY increase in net sales. The increase was aided by the growth in the company's international businesses. However, owing to higher raw material costs as well as increase in advertising expenditure (both as percentage of sales), GCPL's operating margins declined to 18.1% in FY11 as compared to 20.6% seen in FY10. Net profits for the year increased by 51.6% YoY. This was mainly on account of higher other income which offset the negative impact of lower operating margins as well as higher interest costs. Net profits were also aided by an exception item of Rs 411 m which the company received from Sara Lee on the termination of a manufacturing license and also from the sale of leasehold land held by Godrej Hygiene Products. GCPL has seen a positive traction from all the acquisitions made by it during the year.