Metals weigh on the markets

Mon, 16 May 09:30 am

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Renewed worries related to Europe's debt weighed on the Asian stock markets. Nearly all the major markets opened the day in the red. Stock markets in Hong Kong (down 1.1%), Singapore (down 0.9%) and Japan (down 0.6%) and are leading the losses in the region. However, markets in Malaysia (up 0.9%) have opened the day in the positive zone. The Indian stock markets have opened the day on a negative note as well. Stocks in the auto and banking space are leading the losses.

The BSE-Sensex is trading lower by around 121 points (0.7%), while the NSE-Nifty is down by around 28 points (0.5%). Midcap and small cap stocks are trading in the negative as well, with the BSE Midcap and the BSE Small cap indices down by about 0.2% and 0.1% respectively. The rupee is trading at 45.08 to the US dollar.

Engineering stocks have opened the day on a mixed note. On one hand, EMCO Ltd, Carborundum Universal and Areva T&D are leading the gains. On the other hand, Manugraph India, Lakshmi Machine Works and Ingersoll Rand are witnessing selling pressure. Siemens Ltd has announced its results for the second quarter ended March 2011 (it has a September year ending). During 2QFY11, the company's sales grew by 37.1% YoY on the back of rise in the business volumes of its oil & gas, fossil power generation, and power transmission segments. However, the mobility, industry solutions, and real estate segments were a dampener. The company's operating margins improved from 12.9% in 2QFY10 to 14.7% in 2QFY11. At the bottomline level, the company's profits registered a growth of 53.3% YoY on the back of a robust operating performance. Net profit margins improved by 1% from 8.2% in 2QFY10 to 9.2% in 2QFY11. For the half year ended March 2011 (1HFY11), the company's sales and net profits grew by 37.3% YoY and 24.5% YoY respectively.

Energy stocks have opened the day on a positive note with Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corp (IOC) leading the gains. To combat the effect of rising crude oil prices, the oil marketing companies (OMCs) in India decided to hike petrol prices by Rs 5 per litre. This is the sharpest hike ever made by the companies. To match the under recoveries on oil, the companies had needed a price hike to the tune of Rs 9 to 10 per litre. However, they decided to raise prices by half. They plan to have another hike in prices if needed. Despite the deregulation of petrol prices, OMCs had not hiked the prices of petrol due to the 'informal' dictate of the oil ministry. As a result the OMCs had been suffering huge losses on account of under recovery. The price hike on diesel, LPG and kerosene would be decided by the Finance Minister next week. While petrol prices were deregulated last year, prices of diesel, kerosene and LPG (Liquefied Petroleum Gas) are still controlled by the government.