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Mid, smallcaps gain favour
Tue, 9 Nov 11:30 am

After starting today's session on a positive note Indian indices are trading in a narrow zone with an upward bias. However, other key Asian markets are trading in the negative territory. Currently, heavyweights in the Sensex are trading mixed with stocks from IT and realty space leading the gains. However, banking stocks are trading in the red.

Currently, the BSE-Sensex is trading up by around 47 points, while the NSE-Nifty is up by about 16 points. There has been strong buying interest amongst the mid and small cap stocks as well with the BSE-Midcap and BSE-Smallcap indices trading higher by 0.5% and 0.9% respectively. The rupee is trading at 44.38 to the US dollar.

Energy stocks are trading strong led by Petronet LNG and Gujarat Gas. Petronet LNG announced 2QFY11 results recently. Top line declined 10% YoY on the back of lower volumes. Petronet LNG clocked sales volume of 100 trillion British thermal units (tBtu) in 2QFY11, as compared to 114 (tBtus) in 2QFY10. Operating margins improved by 1.5% YoY and stood at 8.9% on the back of lower cost of raw materials (as a percentage of sales). Net profits also increased by 9% YoY during the quarter on the back of a strong operating performance. The bottom line performance was further aided by lower interest costs.

India's largest paper company, Ballarpur Industries Limited (BILT) declared its 1QFY11 results. The company's top line grew by a robust 26% YoY on a back of strong volume growth. Additional capacity at the company's Bhigwan and Ballarpur plants contributed to the boost in volumes. BILT's operating margins fell by 2.8% to stand at 20.4% during the quarter. This was due to an increase in raw material costs. Cost of paper pulp which is the main raw material for the company saw a sharp increase in prices during the quarter. Net profits of BILT fell by 2.2% YoY. This was a result of higher interest costs incurred during the quarter. However, fall in effective tax rates helped check the fall in net profits. Effective tax rate fell from 27.8% in 1QFY10 to 14% during 1QFY11.

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