Auto stocks pull markets lower

Wed, 30 May Closing

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The Indian stock markets had a weak outing on the bourses today, having started the day well below the dotted line. After opening in below par, markets traded at lower levels for the entire session. However towards the final hour the markets almost converged towards the dotted line. But a sharp selloff was seen towards the close. The markets finally ended well in the red, close to the day's lows.

While the BSE-Sensex closed lower by around 126 points (down 0.8%), the NSE-Nifty closed lower by around 39 points (down 0.8%). The smaller indices had a relatively worse day on the bourses. BSE Mid cap index and the BSE Small cap closed 1.3% and 1.2% lower respectively. IT stocks were the only gainers. Auto stocks and consumer durables stocks closed well in the negative.

As regards global markets, all Asian indices had a negative outing today. European indices opened the day on a negative note. The rupee was trading at Rs 56.11 to the dollar at the time of writing.

Tata Motors announced results for the quarter and full year ended March 2012. While consolidated revenues grew by 36% YoY led by strong performance of Jaguar Land Rover (JLR), standalone revenues grew by 15% YoY. On the operating margin front, these declined to 2.1% for the full year leading to an 8% YoY decline in operating profits. Standalone net profits fell by 31% YoY. However, on excluding extraordinary items during both the years under consideration, net profits declined by 7% YoY. As far as the commercial vehicles segment is concerned where Tata Motors is the market leader, sales grew by 16% YoY as against the domestic CV industry growth of 19% YoY. The company saw healthy growth in light CVs, while sales of medium & heavy CVs grew by a tepid 5% YoY. The company continued to face tough market conditions in passenger vehicles. Growth was largely led by the vans and compact segment as the midsize and executive segment saw a decline in sales. Jaguar Land Rover put up a strong show for the year as revenues grew by 37% YoY in GBP terms. Growth was led by a strong market mix (led by emerging markets such as China as the UK and North America witnessed a slowdown) and the positive response to the new Land Rover model Range Rover Evoque. The stock was the top loser among Sensex scrips, falling 11.8% in trade today.

Sun Pharma announced that it expects sales growth of around 18-20% YoY during the current financial year, 2012-13 (FY13). However, this is on a constant rupee dollar exchange rate. Net sales of the company for 4QFY12 were up nearly 60% from the corresponding period previous fiscal. The company also plans on increasing research and development (R&D) spend to 6-8% of net sales. This will help in building a strong product pipeline for the overseas market. The pharma company is planning a capital expenditure of Rs 5 bn during 2012-13. This includes expansion on existing capacity as well as on new sites. However, the company said the increase in Taro Pharma sales will not be sustainable going forward as these were largely a result of price increases on select products in the US market. Taro is Sun Pharma's recently consolidated Israeli subsidiary.