Small and Midcaps in the limelight

Wed, 27 Oct 11:30 am

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   Pre-Open   

   09:30 am   

   01:30 pm   

   Closing   

Indian indices recovered some of their opening losses but continued to languish in the red in the previous two hours of trade. Stocks from the consumer durable and auto space are seeing buying interest while stocks from the realty and IT space are seeing a sell off.

The BSE-Sensex is trading down by 16 points while the NSE-Nifty is trading 9 points below the dotted line. BSE-Midcap is up by 0.3% while BSE-Smallcap index is trading 0.5% above yesterday’s closing. The rupee is trading at 44.57 to the US dollar.

Engineering stocks are trading mixed with Atlas Copco and Everest Kanto Cylinders leading the gains. However, BEML and Alfa Laval are trading in the red. LMW announced its 2QFY11 results recently. Net sales increased 60% YoY during the quarter as a result of strong growth (up 61% YoY) in the textile machinery division. Machine tools and foundry division's sales too saw a healthy growth of 45% YoY during the quarter. Operating margins declined from 17.3% in the same quarter last year to 14.9% in 2QFY11. This was mainly due to a rise in both raw material costs as well as other expenditure as a percentage of sales. The company's net profits increased 42% YoY during 2QFY11. Fall in marginal tax rates and slower growth in depreciation expenses led to strong bottomline growth. However, net margins succumbed due to a consequent fall in operating margins.

Telecom companies are trading mixed with Reliance Communication and Tata Communication trading firm while Idea and Bharti are trading weak. As per a leading financial daily, mobile number portability (MNP) will once again miss its deadline of 31st October. Instead it will be launched in the beginning of November and will be rolled out pan India by the year end in a phased manner. MNP once operational will enable mobile phone users to shift to any mobile user of their choice without changing their mobile number. This facility will be available for a nominal transaction fee of roughly Rs 19. Once applied for a change, the customer will have to wait for 15 days before the number is changed. Post the change, the minimum wait is of 50 days before the same number can be ported again. MNP works best with post-paid customers as they are the highest paying of the lot. Of India's 680 m users, post-paid customers are about 7%-8%, while the remaining customers are pre-paid. A 5% churn is expected in the post-paid category. However, operators believe they will lose and gain roughly the same number of users.