Profit booking takes toll

Wed, 19 Jan Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Markets had a rather choppy trading session today. For the larger part of the day the indices barely managed to stay afloat. However, selling activity intensified in the afternoon session and pushed the indices into the red. From thereon, there was not much respite and the indices closed well below the dotted line. While the BSE-Sensex closed lower by around 114 points (down 0.6%), the Nse-Nifty closed lower by 33 points (down 0.6%). The BSE Midcap and the BSE Small cap, however, bucked the trend as they notched gains of 0.2% each. While auto and banking stocks found favour, IT and oil & gas stocks were at the receiving end.

As regards global markets, most Asian indices closed mixed today while European indices have opened in the red. The rupee was trading at Rs 45.40 to the dollar at the time of writing.

Auto stocks closed mixed today. While Bajaj Auto and TVS Motor found favour, Maruti and Hero Honda closed into the red. Bajaj Auto announced its 3QFY11 results a while ago. Net sales grew by 27% YoY during the quarter. Growth was led by a 17% YoY increase in volumes and a 9% YoY increase in average realisations. Operating profits increased by 18% as operating expenses increased at a faster pace. Operating margins during the quarter contracted by 1.4% as input costs increased as a percentage of sales. Net profits rose by 28% YoY during 3QFY11 (adjusted for extraordinary items). Apart from a decent operating performance, higher other income and a lower tax outgo helped the company perk up the profit growth. During 9mFY11, net sales and profits (adjusted for extraordinary items) rose by 45% YoY and 66% YoY respectively.

As per reports, pharma major Glenmark has received final approval from the US FDA for launching the generic version of GSK Plc’s drug ‘Malarone’. It must be noted that Glenmark had settled its patent suit with GSK in April 2010. As per the terms of the settlement, Glenmark will be able to market and distribute its generic version of the drug under a royalty-bearing license from GSK in the third quarter of 2011, or earlier under certain circumstances. Glenmark also believes that it is entitled to the 180-day exclusivity period given that it is first-to-file for this product. It must be noted that ‘Malarone’ had sales of US$ 56 m in 2009 in the US market and is used for treating malaria. This is a positive for Glenmark and will enable it to enhance sales from the highly competitive US generics market wherein it is has a strategy of launching either niche or limited competition products. The stock closed higher today.

Steel stocks closed firm today with the key gainers being SAIL, JSW Steel and Tata Steel. As per a leading business daily, Tata Steel is looking to double its annual investments in its European operations over the next couple of years to increase productivity. So far, the company had been investing around Rs 14.5 bn annually and is looking to raise this amount to around Rs 30 bn per annum. The company's overall capital expenditure has been pegged at US$ 2-2.5 bn annually for the next 2-3 years. It must be noted that Tata Steel is hoping to raise Rs 35 bn through its FPO. Part of the proceeds will go towards retiring debt and to part-finance the Jamshedpur expansion project.