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Markets tread in negative territory
Tue, 12 Oct 11:30 am

After starting today's session on a negative note Indian indices have lost further ground. Other key Asian markets too are trading in the red. Currently, heavyweights in the Sensex are trading weak with stocks from metals and consumer goods space bearing investors brunt.

Currently, the BSE-Sensex is trading down by around 200 points, while the NSE-Nifty is down by about 65 points. Buying interest is muted amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading lower by 0.7% and 0.3% respectively. The rupee is trading at 44.63 to the US dollar.

Midcaps are trading weak with JSW Steel and Shipping Corp. trading in the red. Plastics textile business major Sintex recently declared its 2QFY11 results. Consolidated net sales grew by 29% YoY during 2QFY11. Growth was driven by a strong performance in both the plastics and the textiles divisions. Operating margins expanded to 18.6% during 2QFY11, from 18.2% in 2QFY10. This was led by lower staff costs and other expenditure (both as percentage of sales). The margin performance would have been better but for a rise in raw material costs and cost on purchase of traded goods. The raw material costs, for instance, increased to 49.1% of sales during the quarter, from 45.9% in 2QFY10. However, due to strong sales growth, expansion in operating margins, and lower depreciation charges coupled with higher other income, net profits surge by 75% YoY during the quarter.

Auto stocks are trading mixed with Hero Honda and Escorts leading the gains. However, Ashok Leyland and Bajaj Auto are trading weak. Tata Motors is planning to launch a new car positioned between Nano and Indica. With the launch of this small car, Tata Motors will provide stiff competition to Maruti-Suzuki's Alto, currently the largest selling hatchback in India. The company plans to launch this small car by 2012 and it will be a complete indigenized product. We believe this was a tactical move considering the auto major is looking to have products across various price points.

Recently the company also launched "Aria" in the premium segment. Aria will be rolled out from Pune's plant and will compete with Toyota Innova and Mahindra Xylo in the crossover space.

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