Realty stocks push markets lower

Thu, 22 Jul 09:30 am

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The Indian markets have started today's session on a negative note. The benchmark indices opened at the breakeven mark, but soon slipped into the negative territory. These have not managed to pare their losses since then. Other key Asian markets are in the red with Japan (down 0.7%) leading the pack of losers. The US markets closed lower by 1.1% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading weak with realty and software majors facing the brunt of selling activity. The BSE-Sensex is trading lower by around 45 points, while the NSE-Nifty is down by about 15 points. However, some buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.2% and 0.1% respectively. The rupee is trading at 47.34 to the US dollar.

Auto stocks have opened the day on a positive note. Gainers here include TVS Motor and M&M. TVS Motor announced its 1QFY11 results yesterday. The company reported a revenue growth of 41% YoY for the quarter. Total two-wheeler volumes jumped 31% YoY to about 460,000 units. Operating margins declined by 0.3% YoY on the back of higher raw material prices (as a percentage of sales). Profits jumped by a whopping 123% YoY on the back of a strong operating performance, coupled with higher other income and a marginal increase in depreciation costs as well as interest charges. The company declared a second interim dividend of Rs 0.5 per share for FY10, taking the total dividend to Rs 1.2 per share. It has also recommended the issue of bonus shares in the ratio of 1:1, subject to approval from shareholders.

Financial stocks have opened the day on a negative note. Losers here include IDFC and ICRA. As per a leading business daily, Rural Electrification Corporation (REC) is planning to raise US$ 1 bn through external commercial borrowings (ECB) during the current fiscal FY11. It expects to raise US$ 400 m by the second week of August. This is likely to be a five-year loan at an interest rate of 6-month Libor plus 1.75%. The ECB fundraising target has gone up from US$ 400 m set earlier, as the company is looking to finance some solar and wind power projects. Moreover, the company is looking at financing a few big-ticket power projects being set up by private players. It may be noted that REC is also planning to raise about Rs 30 bn through infrastructure bonds. These would be issued in two tranches of about Rs 15 bn each in October and February.