Auto, IT stocks push up markets

Thu, 28 Oct 09:30 am

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Asian markets have opened today on a mixed note with Hong Kong, Singapore and Taiwan trading in the green. On the other hand, Japan and China have opened on a weak note. Indian markets are trading in the positive currently. Stocks from auto and IT sectors are leading the pack of gainers.

The BSE-Sensex is trading higher by around 70 points (0.4%), while the NSE-Nifty is up by about 25 points (0.4%). Mid and small cap stocks are trading in the positive as well with the BSE-Midcap and BSE-Smallcap indices trading higher by around 0.4% and 0.5% respectively. The rupee is at 44.49 to the US dollar.

Mixed interest is currently being seen in power stocks with GVK Power and NTPC trading in the green. On the other hand, Torrent Power and Adani Power are facing selling pressure. NTPC recently announced its 2QFY11 results, wherein the company reported a 34% YoY growth in net sales, led by higher generation (up around 3.5% YoY) and sales of electricity. Higher generation was a result of commissioning of new capacity as well as higher capacity utilisation at the existing plants. The company's sales during the first half (1HFY11) were up around 20% YoY. Despite the robust growth in sales during the quarter, NTPC's operating margins took a hit, and declined to 25.6% from 32.7% in 2QFY10. This fall in the margins was largely on account of higher provisions (as percentage of sales). Led by this fall in operating margins as also a lower other income (down 7% YoY), the company's net profits dropped by 2% YoY during the quarter. The situation for 1HFY11 was no different as profits fell 9% YoY here.

Mixed interest is also being seen in stocks from the FMCG sector. While ITC and HUL are witnessing buying interest, selling pressure marks trading in Dabur and Godrej Consumers. Dabur announced its 2QFY11 results yesterday. The company has reported a 15% YoY growth in net sales during the quarter, which was aided by a strong performance by its consumer care and foods division. Operating margins increased marginally by 0.4%. This came on the back of higher raw material costs, though partly offset by lower advertisement and sales promotion expenses, and lower other expenses (all as percentage of sales). Dabur's net profits grew by 15% YoY. This was on the back of higher operating margins as well as lower interest costs during the quarter.

Oil stocks have opened on a positive note with Cairn India and ONGC being the main gainers. Oil Ministry has decided against immediate deregulation of diesel pricing. The Oil Secretary has said that at current prices, it just did not make sense to deregulate diesel prices. As per him, if curbs were lifted, then it would lead to a surge in diesel prices, which will negatively impact the poor. Instead the ministry now plans to lift curbs in a more phased manner. The prices will be deregulated eventually. The ministry had deregulated the prices of petrol earlier this year.