Indian share markets remain weak

Fri, 20 Jul 01:30 pm

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Led by persistent selling across heavyweights, Indian share markets continued to trade well below the dotted line in the last two trading hours. Majority of the sectoral indices are trading in red with banking, capital goods and power being the biggest losers. Consumer durables, metal and FMCG stocks are among the handful of sectors trading in the positive.

The BSE-Sensex is trading down 90 points and NSE-Nifty is trading down 32 points. Both BSE Mid Cap and BSE Small Cap indices are marginally trading down. The rupee is trading at 55.1 to the US dollar.

Majority of mining stocks are trading positive with Metals and Minerals Trading Corporation of India Ltd. (MMTC) and Coal India being the biggest gainers. As per a leading financial daily, the Petroleum Ministry has given its approval to allow Coal India Ltd (CIL) to extract coal mine methane (CMM). However, for commercialization, the Petroleum Ministry's approval has to be sought which will, also, decide the pricing and allocation of the same. CMM is available on the coal bed surface and has to be extracted along with coal. Coal bed Methane (CBM), on the other hand, is available after drilling 250-300 meters in virgin coal mines. Currently CMM is not tapped and is blown out of the mines using fans. However, CMM can be utlilized to fire captive power plants located at mine pit-heads. Reportedly, the company had sought permission to extract CMM from its Bharat Coking Coal and Central Coalfield mines.

Two-wheeler major Hero Motocorp announced its results for the quarter ended June 2012 recently. The company reported a 10% YoY growth in sales and net profits each. Revenue growth was led by a 7% increase in sales volumes. The company sold over 1.6 m units during the quarter as compared to about 1.5 m units during the corresponding quarter last year. Hero Motocorp was able to improve its performance at the operating level as margins increased by 0.4% YoY to 15%. This led the operating profits to grow at a fast clip of 13% YoY during the quarter. However, the company was able to manage a profit growth of 10% YoY as depreciation charges increased at relatively sharper pace of 27% YoY.

As per the company's management, the future volumes growth will have a lot to do with the monsoons as it would eventually get buyers to exercise their decisions to purchase two wheelers. The company also plans to increase its capacity in the next couple of years. The capital expenditure of over Rs 25 bn has been planned towards setting up new plants in Rajasthan and Gujarat. Hero Motocorp stock is down 0.8%.