Capital goods, auto stocks weigh on mkts

Wed, 3 Aug 01:30 pm

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The Indian stock market continued to trade in the red due to selling pressure in heavy-weights over the last two hours of trade. Most of the sectoral indices are trading in the red. Stocks from the capital goods, auto, realty and banking space are trading weak while those from FMCG are finding some investor interest.

The BSE-Sensex is trading down by 144 points while NSE-Nifty is trading 45 points below yesterday's closing. BSE Midcap and BSE Small cap indices are down by 0.7% and 1.0% respectively. The rupee is trading at 44.33 to the US dollar.

Power stocks have been trading mixed with NHPC Ltd, Reliance Infrastructure and Tata Power leading the pack of gainers. However, Torrent power and Jaiprakash Power are trading weak. As per a leading financial daily, Coal India has not yet received the signal from the coal and the finance ministry to make its final bid to acquiring a stake in PT Golden Energy Mines. Indonesia-based Sinar Mas Group is selling about 30-40% stake in PT Golden Energy Mines to strategic investor. It further plans to list the coal company in Jakarta. The coal ministry had asked Coal India to acquire stakes only in overseas companies that are listed. However, the permissions for mine acquisition are not likely to come soon and the company may have to refrain from the bid.

In a separate development, Coal India has missed its production target of 98.6 m tonnes for the April-June quarter of the current fiscal, achieving an output of just 96.3 m tonnes of coal. The shortfall has been attributed to delays in supply of equipment and evacuation problems in the Talcher coalfields in Orissa, excessive rainfall, curfew and other disturbances caused for eviction drive and land acquisitions etc. The stock of the company is trading in the red.

Most of the telecom stocks have been trading in the red with Bharti Airtel, AGC Networks and Idea Cellular leading the pack of losers. However, Tata Teleservices (Maharashtra) is trading firm. Bharti Airtel has released its first quarter results for the financial year 2011-12 (1QFY12). The company has reported nearly 28% year on year (YoY) fall in quarterly profits. Topline of the company, however, is up by over 38% YoY. As per the management, the revenue growth has been steady across all geographies, with Africa recording a healthy sequential growth of approximately 6% and annual growth of 21%. In India, the company's efforts in the area of cost efficiencies have helped arrest the margin decline. The company's pre -tax income declined 17% YoY due to higher finance costs (Rs 3.4 bn on Africa acquisition ) and 3G investments in India and 3G licence fee amortization (Rs 1.6 bn). Also, the effective tax rate for Q1 increased to 30%, mainly due to a reduction in tax holiday benefits in India, which hurt net profit. The company's overall customer base stood at 230.8 million across 19 countries.