Sensex up on global cues

Wed, 14 Jul 11:30 am

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After starting today's session on a positive note Indian indices have continued to tread higher. Other key Asian markets are also in the green. Stocks from consumer durables and banking space are trading strong while stocks from IT and oil & gas space are trading flat to negative.

The BSE-Sensex is trading up by around 79 points, while the NSE-Nifty is up by about 22 points. Buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.6% respectively. The rupee is trading at 46.67 to the US dollar.

Power stocks are mainly trading positive with GVK Power and Infra, and Torrent Power leading the gains. NTPC is also trading positive. The company is in the pursuit of coal mines in Australia, Indonesia, Mozambique and South Africa. It plans to either acquire them or form joint ventures (JVs). The company has already identified coal mines in Australia and will soon deploy special teams to visit these mines.

NTPC plans to increase its capacity from 30,000 mega watt (MW) currently to 75,000 Mw by 2017. It plans to import 5-10 m tonnes of coal from Australia in the next three to five years. The company also plans to import the same quantity of coal from Indonesia. NTPC aims to import 25-30 m tonnes of coal, compared to 15 m tonnes currently, within the next five year period.

Pharma stocks are trading mixed with Cadila Health and GSK Pharma leading the gains. Pfizer India announced its 2QCY10 results yesterday. Top line grew 16% YoY led by its pharmaceuticals business. Growth in the pharmaceutical business is attributed to the strong performance of its key brands namely Corex', 'Becosules' and 'Gelusil'. The clinical operations business reported a strong growth of 66% YoY during the quarter. However, the animal health business reported a tepid growth of 5% YoY. Operating margins declined 90 bps YoY due to increase in staff cost and other expenditure. However, raw material cost saw a sharp fall from 26.2% in 2QCY09 to 20.1% in 2QCY10 cushioning margins. Net profits grew 11% YoY during the quarter in line with the growth in operating profits. However, excluding the non-recurring items growth in net profits was flat.

Going forward, Pfizer's operating margins are expected to remain under pressure due to higher raw material cost. The company has forayed into branded generics in order to gain access to wider market. Two products have already been launched in this category. This should bolster sales growth of the company