Indices retain strength

Mon, 1 Nov 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

The Indian indices have been able to sustain their morning gains and have remained buoyant in the previous two hours. However, other key Asian markets are trading mixed with Nikkei down and Hang Seng in the green. Currently, heavyweights in the Nifty-50 are trading strong with stocks from banking, telecom and healthcare leading the gains. However, auto stocks are trading mixed.

Due to technical problem faced by members in trade confirmation, BSE remained closed between 12.00 and 1.30 pm. Currently, the NSE-Nifty is up by about 110 points (1.8%). The CNX Midcap & the CNX Nifty Junior are both up 1.2% & 1.1% respectively. The rupee is trading at 44.41 to the US dollar.

While most of the stocks from the auto pack are trading firm led by TVS Motor, M&M and Tata Motors, the stock of two-wheeler major, Hero Honda is trading weak. This is on the back of the company announcing a disappointing performance for the quarter ended September 2010. During the quarter, the company’s revenues were up by 12% YoY. Growth was led by a 9% YoY increase in sales volumes. The company sold over a nearly 1.3 m units during the quarter. Hero Honda saw a significant amount of pressure at the operating level as its margins fell by 4.9% YoY to 13.4%. The key reason for the same was higher raw material costs, which stood at nearly 73% of revenues as compared to 68% last year. On the back of a poor operating performance, the company’s net profits declined by 15% YoY. As for the performance during the six month period ended September, revenues were higher by 12% YoY, while profits were down by 9% YoY. The company sold over 2.5 m units during 1HFY11, which is higher by 10% YoY as compared to the corresponding quarter last year.

Consumer Durable stocks have posted significant gains. However, Blue Star is trading in the red. Blue Star has announced its 2QFY11 results. The company has reported 23% YoY rise in sales, and a 22% YoY fall in net profits. The cooling products business (21% of total sales) led the growth in the company’s topline with a 29% YoY growth in sales during the quarter. The operating margins contracted by 3.8% YoY during the quarter on the back of a big spike in cost of traded goods as well as higher other expenditure (both as a percentage of sales). Staff costs and cost of raw materials on the other hand saw a fall. All the company’s individual business segments witnessed a fall in margins during the quarter. On the back of the contraction in operating margins and a higher effective tax rate, Blue Star’s net profits saw a fall in net profits to the tune of 22% YoY. However, excluding extraordinary items on account of a profit on the sale of investments recorded in the same quarter during the previous financial year, the bottomline saw a fall of 13% YoY.