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Indices plummet on weak IIP numbers
Fri, 12 Nov 01:30 pm

Indian indices continued their unabated downward plunge during the previous two hours of trade. While all major indices faced intense selling pressure, stocks from the realty and consumer durable space remained the biggest losers.

The BSE-Sensex is down by 308 points (1.5%) while NSE-Nifty is trading 92 points (1.5%) below the dotted line. Both BSE-Midcap & Smallcap indices are down by 1.5% & 1.6% respectively. The rupee is trading at 44.8 to the US dollar.

Capital goods stocks are majorly trading in the red as the IIP (Index of Industrial Production) registered a much slower-than-expected 4.4% YoY rise in September. This was in fact lower than the previous month's revised annual growth of 6.9%. Manufacturing output rose an annual 4.5% in September. However, the industrial output data for October will get a statistical boost from the revamped wholesale price index that will show a lower inflation figure.

Textile stocks are currently trading in the red with significant selling pressure in the counter of Alok Industries and Arvind Ltd. Alok Industries announced its results for the quarter and half year ended September 2010 recently. During 1HFY11, the company's sales grew by 45% YoY on the back of improved volumes and higher realisations. These factors helped the company improve its performance at the operating level as EBIDTA margins moved up by 0.4% YoY to 29.2% during the period. Strong growth was witnessed in most of the company's business segments, with apparel fabrics business leading the growth (revenues of this business up by 52% YoY).

The company's net profits grew by 42% YoY, a slower growth as compared to the increase in operating profits. This was mainly on the back of higher interest costs. During the quarter, the company reported a revenue and profit growth of 49% YoY and 40% YoY respectively. As against the better operating performance during 1HFY11, Alok Industries' margins during the quarter were lower 1.2% YoY.

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