Metal, IT stocks weigh on markets

Thu, 28 Jul 11:30 am

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Indian stock market extended their losses on sell off in heavy weights over the last two hours of trade. Stocks from the metal and IT space are trading weak while stocks from the FMCG space are trading firm.

The BSE-Sensex is trading down by 190 points while NSE-Nifty is trading 61 points below the dotted line. BSE-Midcap index is down by 0.7% while BSE-Small cap index is trading 0.9% below yesterday's closing. The rupee is trading at 44.15 to the US dollar.

FMCG stocks are trading firm led by Paper Products and P&G Hygiene. Dabur released its first quarter results for the financial year 2011-2012 (1QFY12). The company's top line grew by 31.4% YoY to stand at Rs 12 bn. Dabur's strong performance came on the back of the strong growth seen in key categories coupled with calibrated price hikes. Hair care category saw a growth of 16.1% YoY while toothpastes saw a growth of 14.1% YoY. Homecare category witnessed an impressive growth of 24.9% YoY, while foods category saw a robust growth of 31.5% YoY. Skin care portfolio ended the quarter with a growth of 16.3% YoY aided by Fem range and expansion of Dabur Uveda range. International business almost doubled during the quarter on the back of strong performance by Nigeria, Egypt, GCC and the newly acquired companies.

Operating profits grew slower than the top line and clocked a 27.8% YoY growth during the quarter. This was due to cost inflation pressure faced by the company. Net profits grew by 19.7% YoY during the quarter. Dabur launched several new products during 1QFY12. These included Hajmola Mint Masti, Fem Safe Handz hand sanitizer, Hajmola Saunf variant, Glucose Litchi variant and Real Apricot variant.

Software stocks are trading weak led by HCL Tech and Wipro. HCL Tech declared results for the last quarter of financial year 2010-11 (the company has a June year ending). The company reported a 5% QoQ growth in sales and a 10.7% QoQ growth in net profits. The growth in sales was driven by growth across all geographies and service offerings. However, BPO services did not contribute much to this. For the year ended June 2011, sales grew by 26.2% YoY. Operating margins improved by 1.2% QoQ and declined by 3.4% YoY for the full year. The IT company added 3,949 employees during the quarter and 70 new clients as well. Net profits grew by 10.7% QoQ and 29.9% YoY. This was mainly due to higher operating margins which offset the impact of higher tax rates. HCL Tech has proposed dividend of Rs 2 per share (yield of 0.7%). The total dividend for the year amounts to Rs 7.5 per share.