Markets open with marginal gains

Tue, 17 May 09:30 am

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Most Asian stock markets have opened the day on a weak note. Stock markets in Japan (down 0.4%), Hong Kong (down 0.4%), South Korea (down 0.3%) and Taiwan (down 0.3%) are trading in the red. However, markets in China (up 0.2%) have opened the day in the positive zone. The Indian stock markets have opened the day with marginal gains. Stocks in the capital goods and consumer durables space are leading the gains.

The BSE-Sensex is trading marginally higher by around 20 points (0.1%), while the NSE-Nifty is up by around 5 points (0.1%). Midcap and small cap stocks are trading in the positive as well, with both the BSE Midcap and the BSE Small cap indices up by about 0.3% each. The rupee is trading at 45.10 to the US dollar.

Pharma stocks have opened the day on a firm note with Cipla, IPCA Labs and Piramal Healthcare leading the gains. However, Ranbaxy Labs is witnessing selling pressure. Dr Reddy's has announced its results for the quarter and full year ended March 2011. During the quarter, the company's sales grew by 22.8% YoY on the back of new launches and exclusive products in the US market. The company's operating margins improved from 20% in 4QFY10 to 21.8% in 4QFY11. At the bottomline level, the company's profits registered a growth of 100.7% YoY on the back of a robust operating performance, exceptional gains due to the sale of land as well as foreign exchange gains. However, excluding these extraordinary items and forex impact from both the periods, bottomline grew by 33% YoY, in line with the operating profit growth. Net profit margins improved from 10.1% in 4QFY10 to 16.6% in 4QFY11. For the full year ended March 2011 (FY11), the company's sales and net profits grew by 6.3% YoY and 934.1% YoY respectively.

Power stocks have also opened the day on a firm note with JSW Energy, Suzlon and PTC India trading firm. However, NTPC is trading the red. In a bid to expand its portfolio of mining assets, Coal India is in talks with US based coal firm Peabody Energy to set up a joint venture (JV). The JV would be developing the US$ 600 m mining project of Wilkie Creek coal mine in Australia. Coal India would have a 15% stake in the proposed JV. Earlier, Coal Ministry had stated that any overseas acquisition would be confined to listed companies only. The reason for this was that it would help in terms of valuations of the deal. However, the proposed JV would not be a listed company. Coal India has sought clarifications from the ministry if it can still go ahead with the deal as Peabody is a listed entity. Coal India is also negotiating with other companies for mining projects in US and Indonesia. The stock of the company is currently trading in the green.