Sensex down on auto stocks

Mon, 26 Jul 11:30 am

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After starting today's session on a positive note Indian indices have shed most of the early gains. Other key Asian markets are, however, trading mixed. Stocks from consumer durables and IT sectors are trading positive while stocks from the realty space are in the red. The auto stocks are trading deeply in the red.

The BSE-Sensex is trading down by around 30 points, while the NSE-Nifty is down by about 11 points. Some buying interest is being seen amongst the small cap stocks as the BSE-Smallcap is higher by 0.1%. The BSE-Midcap index is however trading weaker by 0.2%, with mid cap stocks losing favour. The rupee is trading at 46.86 to the US dollar.

Finance company stocks are trading mixed with Indiabulls Financial Services and Shriram Transport trading positive. Mahindra Finance recently declared its 1QFY11 results. Its interest income grew by 24% YoY on the back of 31% YoY growth in advances. Assets under management also grew by 27% YoY. The value of assets financed grew 76% YoY over the past 12 months. Its disbursements largely favoured auto/utility vehicles and cars. Net interest margins dropped from 6.3% in 1QFY10 to 5.5% but, profits grew by 85% YoY during 1QFY11. This was largely on the back of growth in interest income and write back of provisioning. Other income however, fell 4% during the quarter. Its capital adequacy ratio remained healthy at 17.4% at the end of 1QFY11.

Realty stocks are trading weak with HDIL and Orbit Corporation leading the pack of losers. However, DB Realty and Peninsula Land are trading flat. As per a leading news daily, Anant Raj Industries (Anant Raj) plans to develop 5 hotels in 3 and 4 star categories in the coming quarters. The company plans to lease out these hotels or operate it by themselves under a tie-up with hotels chains. Anant Raj has tie up with three hotel operators namely Seasons, Aitken Spence and Althoff Hotels.

In 2008, Anant Raj had curtailed its hospitality plans due to the overall slowdown in the sector. However, on the back of better macro economic trends it seems that the company has revived its hospitality plans. Improved outlook and commonwealth games in the NCR region this year should increase the hospitality demand further. It should be noted that Anant Raj has 7 hotels strategically located close to the Delhi airport. This should help maintain/increase occupancy and average room rates (ARR). Earlier, the company stated it will invest Rs 60 bn to buy land primarily in the NCR region to launch different projects. It has already spent Rs 20 bn to acquire land in Manesar and Sonepat in the NCR region.