Metals weigh on the markets

Thu, 12 May 09:30 am

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Asian stock markets have opened the day in the red. Nearly all major markets are currently trading weak. Stock markets in Korea (down 1.2%), Hong Kong (down 0.8%) and Japan (down 0.8%) are leading the losses in the region. The Indian stock markets have opened the day on a negative note as well. Stocks in the metals and technology space are leading the losses.

The BSE-Sensex is trading lower by around 73 points (0.4%), while the NSE-Nifty is down by around 25 points (0.4%). 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 0.1%. The rupee is trading at 44.74 to the US dollar.

Engineering stocks have opened the day on a positive note. Havells India, Punj Lloyd and Voltas are leading the gains in the sector. KSB Pumps has announced its first quarter results for the financial year 2010-2011 (the company has a December year ending). The company reported a 20% YoY increase in its total sales. The growth was driven by the 53% YoY growth in the company's valve business. The pump business recorded a comparatively subdued growth of 14% YoY. The growth was decent considering the increased competition as well as the challenging macroeconomic environment. Operating margins declined to 9% during the quarter as compared to 16% seen during the same period last year. This was on account of higher input prices. Net profits declined by 33% YoY during the quarter. This was on account of lower operating margins combined with higher depreciation charges during the quarter. The decline would have been worse had it not been for the 36% YoY decrease in the tax outgo during the quarter.

Cement stocks have opened the day on a weak note with Samruddhi Cement, Ambuja Cements and Mangalam Cement leading the pack of losers. Grasim Industries has announced its results for the quarter and year ended March 2011. Consolidated revenues grew by 18.7% YoY during 4QFY11 and by 6.7% YoY during FY11. The growth during the financial year was led by the VSF (viscose staple fabric) business which posted a 22.6% rise in revenues led mainly by higher VSF realisations. Grasim's cement sales through its subsidiary UltraTech Cement posted a marginal rise of 3.2% YoY as cement realisations dipped. On the other hand, the chemical business grew by 10.1% YoY as both volumes and realisations were higher than the previous year. The operating margins declined by 7% from 29% in FY10 to 22% in FY11 on the back of high input costs. At the bottomline level, consolidated profits declined by 17.9% YoY. Net margins declined from 13.8% in FY10 to 10.6% in FY11. The company's board has recommended a dividend of Rs 20 per share for the financial year ended March 2011. The stock of Grasim is currently trading in the green.