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Realty, banking pull market down
Wed, 27 Oct 01:30 pm

Persistent selling activity led the Indian markets to fall deeper into the red during the previous two hours of trade. Currently, stocks from the realty, banking, and power spaces are leading the pack of losers, while those from the consumer durables, metals and auto spaces are the top performers. The overall market sentiment is skewed towards the pessimistic side as the decline to advance ratio is poised at 1.2 to 1 on the overall BSE.

The BSE-Sensex is trading lower by about 170 points (down 0.9%), while the NSE-Nifty is trading lower by about 55 points (down 0.9%). The BSE-Midcap is trading marginally lower, while the BSE-Smallcap index is trading flat. The rupee is trading at 44.63 to the US dollar.

State-owned Rural Electrification Corporation (REC) declared its results for the quarter ended September 2010 recently. The institution's top line grew 30% YoY during both the quarter and half year ended September 2010. This was mainly on the back of a 26% YoY growth in advances. The growth was majorly driven by increased demand for funding power projects and banks' reluctance to fund long term assets with their short term liabilities. Its net interest margins improved to 4.5% at the end of 1HFY11 from 4.3% at the end of 1HFY10. The bottom-line surged by 25% YoY in 2QFY11 and for 1HFY11 backed by a healthy increase in net interest income.

Stocks of engineering companies are currently trading weak led by BEML, Punj Lloyd, Alstom Projects and Gammon India. Voltas announced its numbers for the quarter ended September 2010 recently. The company reported a 2% YoY decline in revenues during 2QFY11, while profits fell by 17% YoY (on excluding extraordinary items). The decline in revenues was largely driven by the weak performance of its electro mechanical projects and services segment (down 8% YoY) on account of delays in execution of some large projects caused by certain external factors. This business contributed to nearly two-thirds of the company's revenues during the quarter. On the other hand, its unitary cooling products and engineering products & services segments recorded an increase in revenues on a year on year basis. At the operating level, the company recorded margins of 10% from 10.9% last year. This was mainly on account of higher raw material costs. Profits were higher by 2% YoY due to an extraordinary income earned this quarter.

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