Realty, engg stocks buck weak trend

Fri, 8 Nov Closing

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The Indian markets traded in a choppy manner throughout the day, albeit below the dotted line. The BSE-Sensex closed lower by about 156 points or 0.8%, while the NSE-Nifty ended lower by about 46 points or 0.8%. Weakness was seen in stocks from the consumer durables, banking and oil and gas spaces, while stocks from the realty, capital goods and power spaces were in favour today. Mid and smallcap stocks closed the day on a weak note as well with the BSE Mid Cap and BSE Small Cap indices ending down by 0.2% and 0.3% respectively.

Asian indices ended the day on a weak note, with China and Japan closing lower by about 1% each, while Hong Kong closed lower by about 0.6%. The rupee was trading at Rs 62.66 to the dollar at the time of writing.

Stocks of automobile companies ended the day on a weak note with Maruti Suzuki, Mahindra & Mahindra and Bajaj Auto leading the pack of losers. Eicher Motors however bucked the trend with gains of about 2.8% on the back of the company announcing a good set of results for the quarter ended September 2013 (3QCY13). The company's consolidated revenues grew by 14% YoY, while profits grew by a sharp 62% YoY. It may be noted that the profits include a onetime item of Rs 527 m on account of provisions being written back. Excluding the same, profit before tax was higher by 20% YoY. The revenue during the quarter was driven by a solid performance of the company's standalone business, which is its two wheeler business (sold under the Royal Enfield brand). Revenues from the latter grew by 66% YoY while profits surged by 87% YoY. A 4.2% YoY margin expansion was the key reason for the faster growth in profits. Revenues from the standalone business formed about 27% of overall revenues (19% last year) during the quarter. As for the company's commercial vehicle business, the same grew by 1% YoY, while profit before tax (adjusted for onetime item) declined by 26% YoY. During the 9mCY13 period, consolidated revenues grew by 7.2% while profits before tax (adjusted for one time item) remained flat.

Banking stocks ended the day on a weak note with Axis Bank, Punjab National Bank and Yes bank leading the pack of losers. The country's second largest public sector bank, Punjab National Bank declared a disappointing earnings performance for 2QFY14. While the net interest income increased by 10.1% YoY for the quarter, net profits declined by 52.6% YoY. For first half (1HFY14), profits declined by 23.0% YoY. Net interest income (NII) at Rs 402 bn grew by 10.1% YoY in 2QFY14, on the back of modest 6.5% YoY growth in advances. Profitability for the quarter declined by a higher percentage on account of the significant rise in provisions. Other income too declined by 0.9% YoY in 2QFY14. Gross NPAs (non-performing assets) stood on the higher side at 5.1% levels. Net NPA came in higher at 3.07% in 2QFY14 from 2.69% in 2QFY13.On a sequential basis the NPAs have moved up for the quarter. Capital adequacy ratio currently stands at 11.62% at the end of 2QFY14 as per Basel III norms.