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Revealed
India's Third Giant Leap

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Positive momentum sustained
Fri, 20 May 11:30 am

Over the last two hours of trade Indian stock markets continued their march north on the back of buying interest in heavy weights. Stocks from the capital goods and power space are the biggest gainers, while stocks from the IT and FMCG space have gained the least.

The BSE-Sensex is trading up by 173 points while NSE-Nifty is trading 54 points above the dotted line. BSE Midcap index is up by 0.8%, while BSE Small cap index is trading 0.9% above yesterday's closing. The rupee is trading at 44.93 to the US dollar.

Consumer goods stocks are trading firm led by Camlin and Godrej Consumer. Pidilite released its 4QFY11 results. The company's top line grew by 24.5% YoY during the quarter. This performance was supported by a strong growth by the company's consumer & bazaar products and industrial products businesses. While the consumer & bazaar products segment grew by 27% YoY, industrial products segment grew by 24.4%. However, the others segment fell by 18.2% YoY. Operating income of Pidilite grew by 16.3% YoY while its margins fell by 1% to stand at 14.4% during 4QFY11. This was due to a sharp increase in raw material costs partially offset by slower growth in staff costs. While raw material costs increased by 30.2% YoY staff costs increased by 17.2% YoY. Net profit of the company fell by 46.8% YoY. This was due to write off in value of subsidiary and higher effective tax rate partially offset by foreign exchange gain, rise in other income and fall in interest costs.

Retailing stocks are trading mixed with Titan Industries and Zodiac Clothing in the green, while Koutons and Shoppers Stop are trading weak. As per a leading financial daily, Titan Industries is looking at reducing dependence on imports from China. To save costs the retailing company instead wants to manufacture them locally. For this it will be ramping up its manufacturing capacity and is expected to manufacture 16.5 m watch pieces this year. A new plant has been set up in Pantnagar with a capacity of 5 m pieces. It is also upgrading existing capacity at Hosur for gold plating and stainless steel case making.

The costs of imports for the speciality retailer have been rising over the last couple of years. It may be noted here that the company's imports of watch parts and watches make 30% of its revenues. As per management, outsourcing is becoming expensive, so they need to look out for alternate solutions. Recently, the watch and jewellery retailer increased the prices of its products by 5%.

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