Realty and IT lead gains

Thu, 5 Aug 01:30 pm

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The Indian markets have lost some of the gains achieved in the previous session and are currently trading marginally in the green. Currently, stocks from the realty and IT sectors are amongst the top gainers. Those from the oil and gas and power sectors are among the top losers.

The BSE-Sensex is trading up by around 43 points, while the NSE-Nifty is trading up by 10 points. Stocks from the midcap and smallcap spaces are trading firm with the BSE-Midcap Index trading higher by 0.5%, while the BSE-Smallcap Index is trading higher by 0.8%. The rupee is trading at 46.18 to the US dollar.

Pharma stocks are mainly trading positive with Wockhardt and Piramal Healthcare leading the gains. Ipca Labs recently announced its 1QFY11 results. Ipca’s revenues during the quarter grew by 16% YoY. This was largely led by the domestic and export formulations businesses. APIs however, did not do too well during the quarter as sales from this segment grew only by 5%. Ipca’s operating margins contracted by 3% during the quarter due to an increase in staff costs and other expenditure (as percentage of sales). Ipca’s net profits fell by 22% YoY during the quarter. This was due to the decline in operating margins, higher depreciation charges and forex losses (as against forex gains in 1QFY10). Excluding the forex loss of Rs 29 m, the decline in net profits was lower at 4% YoY. Even a reduction in interest costs and tax expenses could not do much to arrest the dip in profits.

Auto stocks are trading mixed with Tata Motors and Maruti Suzuki trading firm while Eicher Motors and Escorts are trading weak. As per a leading financial daily, India’s largest passenger car maker, Maruti Suzuki may soon forge a manufacturing deal with Volkswagen. Finer details of the plan between the two companies are not known. However, since Maruti has extensive expertise in building small cars, it is believed that cars for Volkswagen would be built for the same segment. It is thought that Volkswagen is sourcing technology from Suzuki to fine-tune its compact car Up! The manufacturing cost for which is much higher compared to other cars in the same category. Hence Volkswagen is looking to exploit Maruti’s cost efficiencies in India to help it manufacture this car more economically. It may be noted that Volkswagen had picked up nearly 20% stake in Suzuki Motor last year for US$ 2.5 bn. This was done to gain small car technology and explore different markets.