Markets continue their march north

Fri, 27 May 11:30 am

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Indian stock market indices extended their gains on the back of buying interest in index heavyweights over the last two hours of trade. Barring auto and consumer durable stocks, all sectors are trading in the green.

The BSE-Sensex is up by 174 points while NSE-Nifty is trading 47 points above previous closing. BSE Midcap and BSE Small cap indices are up by 1% and 0.8% respectively. The rupee is trading at 45.21 to the US dollar.

Energy stocks are witnessing buying interest led by HPCL and IOC. As per a leading financial daily, RIL's joint venture with the hedge fund DE Shaw may rival leading banks in a few years. The joint venture is looking at offering services across the financial domain including algorithmic trading, lending, stock broking and asset management. The venture will combine the computing skills and fund management expertise of DE Shaw along with resources and relationships of Reliance Industries.

It may be recollected that this joint venture was declared in March this year. The aim of the venture is said to provide financial advisory services to the rising middle class in India. It will be set up as a non banking finance company (NBFC). As per management, they will start launching of private equity funds that will invest in Indian companies. Soon, investment banking and corporate banking services would also start.

Auto stocks are trading weak led by Tata Motors and Force Motors. Tata Motors announced its results for the fourth quarter and full year ended March 2011. On a consolidated basis, the company's top line grew by a healthy 33% YoY for the year led by a 24% YoY growth in global volumes which included Jaguar Land Rover. In the domestic market, the company's commercial vehicles sales increased by 23% YoY commanding a market share of 61.8%. Passenger vehicles, including Fiat and Jaguar Land Rover vehicles distributed in India, grew by 23% YoY in the domestic market during the year. Moreover, sales of the Tata Nano crossed the 100,000 mark during the year. On a consolidated basis, the company's operating margins improved from 8.8% in FY10 to 13.7% in FY11 largely led by a ramp up in the margins of Jaguar Land Rover. On a standalone basis, however, the company witnessed some pressure on margins on account of rising input costs. Thus, led by a strong performance in both the top line and the operating profits, the consolidated bottom line (excluding extraordinary items) grew by an impressive 220% YoY. Reduction in interest costs also played its part in bolstering the bottom line.