Volatility plagues the markets

Thu, 29 Jul 01:30 pm

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Indian indices lost their gains on profit booking in heavy weights during the last two hours of trade. Presently the markets are trading flat. Stocks from PSU and FMCG space are trading firm while stocks from the capital goods and metal space are trading weak.

The BSE-Sensex is trading flat while NSE-Nifty is trading 2 points above the dotted line. BSE-Midcap index is trading up by 0.2% while and BSE-Smallcap index is trading at yesterday's closing levels. The rupee is trading at 46.67 to the US dollar.

Engineering stocks are trading mixed with Havells India and Engineers India trading firm while Shanthi Gears and Sanghvi Movers are trading weak. Voltas declared its 1QFY11 results. The company posted a top line growth of 13% YoY. This growth came on the back of a strong volume based growth in the company's unitary cooling products division. This higher demand was due to an exceptionally hot and prolonged summer. On the other hand the company's electro-mechanical projects & services division saw a subdued quarter as a result of slow project implementation by many of its clients. Sales of Voltas' third division, that is engineering products and services, increased by 5.6% YoY during the quarter. The company's operating margins expanded by 0.4% as a result of lower raw material costs and other expenditure (both as a percentage of sales). The bottom line increased by 18% YoY as a result of higher operating income and other income as well as a lower effective tax rates.

Hotel stocks are mainly trading negative with Oriental Hotels and Hotel Leelaventure leading the losses. Indian Hotels is trading flat with a negative bias. The company is bullish on the growth prospects of the domestic market in India. The company is confident of not only maintaining its 25% market share in the Indian hospitality sector but increasing it as well. The company plans to increase its market share going forward with a huge line up of projects. It has 75 projects planned across the country and it expects its room capacity to touch 20,000 from the current 12,500. The company has a strong and well diversified hotel portfolio. It is able to target luxury, upper upscale, upscale and economy customers through its brand names Taj, Vivanta, Gateway and Ginger. The company is thus well poised to take on both domestic and international competition. Coming after a dismal performance in FY10 due to due to economic slowdown and terror attacks, it looks like the tide may be turning for the company. India also needs to increase its room capacity in the hotel space over the next couple of years. With increased demand it will need to more than double capacity from the current 40,000 or so rooms.