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Markets flat with a positive bias
Thu, 28 Oct 11:30 am

After starting today's session on a positive note, Indian indices have managed to hold on to their gains. However, other key Asian markets are trading mixed. Currently, heavyweights in the Sensex are trading mixed with stocks from the technology and oil & gas space leading the gains. However, realty and power stocks are in the red.

Currently, the BSE-Sensex is trading up by around 42 points, while the NSE-Nifty is up by about 15 points. There has been some buying interest amongst the mid and small cap stocks as well with the BSE-Midcap and BSE-Smallcap indices trading higher by 0.1% and 0.3% respectively. The rupee is trading at 44.48 to the US dollar.

Hotel stocks are trading mixed with Indian Hotels and Hotel Leela leading the gains. However, Taj GVK and Oriental Hotels are trading in the red. Indian Hotels plans to raise Rs 8.5 bn by issuing shares and warrants to the promoter company, Tata Sons. The proceeds will be used to retire debt and strengthen the balance sheet. The board has approved issuance of 36 m equity shares and 48 m convertible warrants as preferential allotment to the promoters. It may be noted that Indian Hotel's consolidated debt stands at Rs 42.1 bn. Repayment of debt through issue proceeds is likely to reduce interest burden and improve profitability. The company also plans to incur a capex of Rs 3.5 bn and has adequate liquidity in place. It may be noted that post the preferential allotment promoters' holding in Indian hotels will go up to 37.5% from 30.2%.

Paint companies are trading firm led by Asian Paints and Kansai Nerolac. Asian Paints declared its 2QFY11 results. The company's topline grew by a muted 5% YoY during the quarter as a result of monsoons which delayed construction activity during the period. Operating margins of the company declined by 0.4%, during the quarter to stand at 18.7%. This dip was due to higher raw material costs faced by the company. The price of titanium dioxide, which is a key raw material, has been on the uptick recently and this put pressure on margins. Net profits declined 20% YoY during the quarter on the back of lower other income, higher depreciation and increase in minority interest. However, the company has declared an interim dividend of Rs 8.5 per share.

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