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Capital goods drag markets down
Tue, 30 Oct 11:30 am

Indian equity markets shed initial gains and traded in the red during the last two hours of trade. Sectoral indices traded weak except IT stocks.

The BSE-Sensex is trading lower by 134 points and NSE-Nifty is trading down by 41 points. BSE Mid Cap and BSE Small Cap indices are trading down by 0.5% and 0.3% respectively. The rupee is trading at 53.87 to the US dollar.

FMCG stocks are trading in the red led by Archies Ltd and Pidilite Industries. FMCG company Hindustan Unilever Limited (HUL) announced results for second quarter of financial year 2012-2013 (2QFY13). The revenues grew by 12.5% YoY led by 16% growth in its domestic consumer business. Operating expenditure was up by 11.5% YoY during the quarter implying a rise in operating profit by 18.2% YoY. Operating profit margins expanded by 80 basis points. Other income jumped by 83.4% YoY thereby resulting in a net profit growth of 17% YoY. This was despite higher interest charges and lower extra ordinary income as compared to the same quarter last year. The company's net profit margins also expanded by 0.5% during the quarter.

Energy stocks are trading in the red led by Castrol and GSPL. According to a leading financial daily, Oil and Natural Gas Corporation Ltd.'s (ONGC) deepwater well in a Krishna Godavari (KG)basin block has been leaking gas for two months and there are now fears of environment damage due to the uncontrolled flow. The well G-1-9 in Bay of Bengal has been leaking gas since August-end and all efforts by ONGC to contain the flow have so far yielded no results. After attempting in-house solutions, the company is now looking at outside specialists to cap the well. There are fears that the well may start spilling oil too, which may spell environmental disaster. The company has sought help of Coast Guard and Navy as well as neighbouring operators like Reliance Industries-BP combine and Cairn India to control the gas leak. There are conflicting reports about the distance of the leakage from the shore line. Some accounts put it at 20 km, while others said 150 km.

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