Volatility hits markets

Wed, 12 May 11:30 am

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In the last two hours of trade, the benchmark indices pared their opening gains, briefly trading in the red and then returning to the positive territory. Defensive stocks are seeing buying interest as heavyweights stocks from healthcare and FMCG space lead the gainers. Buying interest is seen in the smallcap space. Stocks from power and metals are leading the losers as investors are booking profits in these stocks.

BSE-Sensex is trading in the green albeit marginally. BSE-Midcap Index is trading lower by 0.2% while BSE-Smallcap index is trading marginally above yesterday's closing. The rupee is trading at 45.32 to the US dollar.

As per a leading daily, HUL may add Rs 3,200 m to its sales following the roll out of its concept stores. The company's trade initiative dubbed "Perfect Stores" is set to be launched at 80,000 store locations, spread over 72 cities. This marketing initiative was started about 3 years ago and is HUL's last mile go-to-market strategy. The company through "Perfect Stores" aims to rationalize its distribution network by making it more efficient, deliver stocks to retailers faster and reduce inventory on store shelves. The objective is to raise sales in these stores by 30%. In fact, national roll-out began early this month and in the first week itself, HUL created around 20,000 Perfect Stores.

The company's focus on general retail trade is one amongst the many initiatives the company is taking to double its revenue. However, it may be noted that HUL's 9mFY10 sales were Rs 132,080 m. Hence on an annualized basis this initiative would add roughly 2% to the company's top line.

Oracle Financial Services announced its 4QFY10 and FY10 numbers recently. The company reported a 4% QoQ growth in revenues during the quarter. However, revenues dropped by 2% YoY for the full year. Growth during the year was mainly hampered by a 12% YoY decline in revenues of its services business, which contributed to about 32% of revenues. Growth during the quarter was driven by the strong surge in product business revenues. The company's operating margins expand by 1% QoQ during 4QFY10. During the full year the margins expanded by 9% YoY. This was on the back of effective all-round cost containment, decrease in headcount and greater proportion of revenue from product business, which garners higher margins. The company took a hit on the bottom line front, as its profits fell by 31% QoQ during 4QFY10. This was mainly due to forex losses and a higher tax outgo. For the full year, profits increased by 5% YoY in FY10.