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Mid and small caps in the limelight
Fri, 21 Jan 11:30 am

Indian indices continue to trade in the red as buying interest in heavy weights continued over the previous two hours of trade. Stocks from IT and metal space are trading weak while stocks from the oil & gas and consumer durable space are trading firm.

The BSE-Sensex is down by 58 points while Nse-Nifty is trading 9 points below the dotted line. BSE Midcap is up by 0.6% while BSE Small cap index is up by 0.8%. The rupee is trading at 45.74 to the US dollar.

Energy stocks are trading mixed with Gujarat Gas and Reliance Industries trading firm and ONGC and Chennai Petroleum trading weak. Indraprastha Gas Limited released its 3QFY11 results. The company has performed very well with its top line growing by a robust 60% YoY. This performance comes on the back of higher volumes (up 18.9% YoY) and realizations in both CNG and PNG segments. While CNG’s volumes and realizations registered 13.7% YoY and 30% YoY growth respectively, the volumes and realization for PNG rose by 92.4% YoY and 21.2% YoY respectively. Operating margins however declined 8.4% YoY to stand at 28.3% for the quarter. This decline was the result of higher raw material costs and increase in staff costs. Net profits grew by 14% YoY. The growth was slower than operating profits. The reason for the same is decrease in other income and higher interest expense.

Cement stocks are trading firm led by Chettinad Cement and Birla Corporation. However, Samruddhi Cement and ACC are trading weak. Recently cement prices in northern region have increased by Rs 20 per bag, a second increase in the region within a month. In the western region too prices have gone up by Rs 8-10 per bag while the southern and the eastern regions are also witnessing an increase in prices, albeit marginally. However, there is no visibility whether the increase in prices is sustainable or not as the construction activity has witnessed a slow down across regions. The primary reason for increase in prices is shortage of wagon availability and lack of incremental supply from the Southern region. It may be noted that due to significant capacity addition in the recent past, prices of cement had corrected dramatically. Even now the capacity utilization figures on all India basis are not encouraging signifying that the price rise may be temporary.

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