Indian markets open weak on global cues

Wed, 3 Aug 09:30 am

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Asian stock markets have opened the day on a firm note. Stock markets in Hong Kong (down 1.8%), Korea (down 2.8%), Japan (down 2.2%) and Indonesia (down 1.3%) are leading the losses. However, markets in China (up 0.3%) are trading in the green. The Indian stock market have opened the day on a weak note. Stocks in the Realty and Capital Goods space are leading the losses.

The BSE-Sensex is trading down by 178 points (1%) and the NSE-Nifty is down by around 55 points (1%). Midcap and small cap stocks are trading in the red, with the BSE-Midcap and BSE-Small cap indices down by 1.2% and 0.9% respectively. The rupee is trading at 44.24 to the US dollar.

Pharma stocks have opened the day on a weak note with Cipla and Wockhardt in the red. India's pharma major, Wockhardt, has signed an agreement to sell its nutrition business to Danone. With this, Danone enters the baby nutrition and medical nutrition markets in India. As per the agreement, Danone will acquire Wockhardt's nutrition business including brands and related manufacturing facilities. The deal size is around US$ 250 m. The nutritional business of Wockhardt holds brands like Dexolac, Farex and Nusobee in the baby nutrition segments and the brand awareness for the same is quite high. In addition, the nutritional supplement brand Protinex also has a strong brand recall. This acquisition will provide Danone access to a distribution network all across India. The transaction will be closed subject to certain terms and conditions of this agreement which includes an approval from the FCCB (Foreign Currency Convertible Bonds) holders.

Steel stocks have opened the day on a weak note as well with Bhushan Steel and Ispat Industries leading the pack of losers. Steel major Steel Authority of India Ltd (SAIL) has announced its first quarter results for the financial year 2011-2012 (1QFY12). The company has reported a 19.6% YoY increase in its revenues. The growth was driven by the good performance of the export business which clocked a growth of a whopping 131% YoY during the quarter. The domestic business also clocked a healthy growth of 17% YoY during the quarter. This was boosted by the expansion of the dealer network which contributed around 21% of total revenues. However, higher raw material costs played spoil sport and led to a 28.8% YoY decline in operating profits. Operating margins stood at 12% as compared to 20.2% seen during the same period last year. Net profits also declined by 28.8% YoY during the quarter. The stock of the company is currently trading in the red.