Indian stock markets open in the red

Tue, 10 May 09:30 am

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Asian stock markets have opened the day on a mixed. Stock markets in Hong Kong (up 0.8%), Singapore (up 0.3%) and Indonesia (up 0.3%) are trading in the positive territory. However, stock markets in Korea (down 0.4%) and Japan (down 0.2%) are trading in the red. The Indian stock markets have opened the day on a negative note as well. Banking and technology stocks are leading the losses.

The BSE-Sensex is trading lower by around 21 points (0.1%), while the NSE-Nifty is down by around 8 points (0.2%). Midcap stocks are trading in the negative as well, with the BSE Midcap index down by about 0.1%. Small cap stocks are witnessing buying interest and the BSE Small cap index is up by 0.2%. The rupee is trading at 44.71 to the US dollar.

Pharma stocks have opened the day on a good note. Aurobindo Pharma, IPCA Labs and Dr Reddys Labs are trading in the green. However, Ranbaxy and Biocon are witnessing selling pressure. Piramal Healthcare has announced its financial results for the quarter and full year ended March 2011 (FY11). The company's topline has registered a decline of 41% YoY during 4QFY11 (fourth quarter of financial year 2010-2011) and 30% YoY during FY11. The main reason for this decline is the sale of the company's domestic formulation and diagnostics business. Operating margins also witnessed a sharp fall of about 15% YoY during the quarter due to the hiving off of the high margin domestic formulation business. The company had sold this business in May last year (2010). Net profits grew by 31% YoY during 4QFY11 due to interest income and foreign exchange gains. The company's board has recommended a dividend of Rs 12 per equity share (dividend yield of about 2.8%).

Auto stocks have opened the day on a negative note. Hero Honda and Bajaj Auto are leading the losers' pack. The boom in the auto car sales appeared to be tapering off in April. The increase in car sales was the slowest in nearly two years. As per Society of Indian Automobile Manufacturers (SIAM), domestic car sales increased by 13% YoY during April. As per SIAM, the slowdown is on account of the rising interest rates which has led to lower domestic demand. Interest rates on auto loans have gone up as the Reserve Bank of India continued to tighten the monetary policy. In addition to this, higher input prices have forced carmakers to increase the prices. This has led to a slowdown in demand. The slowdown in sales was more for the top companies including Maruti Suzuki, Hyundai Motors and Tata Motors. The sales for these companies grew at a slower pace than that of the overall industry. Maruti Suzuki reported a 7.6% YoY increase in sales, while Tata Motors reported a 1.1% YoY decline in sales during the month. Commercial vehicle sales grew by 8.2% YoY during April.