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Metal stocks lead the rally
Fri, 27 Jul 11:30 am

Indian equity markets continued to trade strong over the last two hours of trade on back of heavy buying activity witnessed across industry heavyweights. metal and banking stocks witnessed maximum buying interest.

The Sensex today is up by 302 points, while the NSE-Nifty today is up by 99 points. BSE Mid Cap index and the BSE Small Cap index are up by 1.32% and 1.25% respectively. The rupee is trading at 55.44 to the US dollar.

Steel stocks are trading in the green led by Tata Steel and JSW Ispat. According to a leading financial daily, Tata Steel is planning to merge Tinplate Company of India Limited and Tata Sponge Iron Limited with itself. The proposed integration will allow Tata Steel to have better control over downstream products and develop a fully integrated chain. From technology to research and development, everything is sourced from the parent. Keeping these companies separate means extra taxes, separate work culture. Thus it makes sense for the company to merge the two companies. The company has already initiated a process to ramp up its holding in these two companies. It has announced open offers to acquire shares from minority stakeholders, which would result in a higher promoter's block. Tata Steel currently holds 59.4% in Tinplate and just under 40% in Tata Sponge.

Stocks of FMCG companies are trading firm led by Godrej Consumer and Dabur. ITC announced its results for the quarter ended June 2012 recently. The company reported a revenue growth of 15% YoY during 1QFY13, led by a 17% revenues increase in its core FMCG business (cigarettes and non-cigarettes both). On the other hand, the company's paper business grew by 8% YoY. Revenues of its hotels and agri businesses remained stagnant during the quarter. ITC's operating profits increased at a faster pace as compared to the increase in revenues on the back of a slower increase in expenses. During 1QFY13, operating margins stood at 35.3% as compared to 33.5%, leading to an operating profit growth of 21% YoY. ITC's net profit grew by 20% YoY, aided by 21% rise in operating profit and 31% cut in interest expense. The stock is currently trading higher by about 1.7%.

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