Indian indices continued to slide deeper into the red as selling pressure in heavy weights intensified during the previous two hours of trade. Currently, stocks from the healthcare and realty space are leading the losses.
The BSE-Sensex is trading down by around 153 points, while the NSE-Nifty is down by about 45 points. Buying interest amongst the mid and small cap stocks is muted as well with the BSE Midcap and BSE Small cap indices trading lower by 0.8% and 0.5% respectively. The rupee is trading at 45.64 to the US dollar.
Auto stocks are currently trading weak led by M&M, TVS Motor, Ashok Leyland and Maruti Suzuki. A leading business daily has reported that passenger car manufacturers are increasingly looking at importing tyres as the domestic tyre suppliers are unable to meet the demand. Auto majors collectively are facing issues of lower production levels on the back of this issue. Passenger vehicle majors such as Maruti Suzuki, Tata Motors and Hyundai Motors are anticipating a 25% increase in production for the calendar year 2011. In fact, it is believed that production levels in 2010 would have been higher by about 20% had it not been for the supply issues. With the same happening, waiting periods for popular vehicles have gone up to four to five months. One of the key reasons for the lower tyre production has been the sharp rise in tyre costs. And in order to protect margins, tyre manufacturers have been diverting their products to the replacement market as it is relatively more profitable as compared to the OEM market. It is believed that in 2010, tyre manufacturers diverted about 50% of their production to the replacement market as compared to the normal level of 35% to 40%.
3i Infotech has announced its consolidated 3QFY11 results. The company reported a marginal 0.9% QoQ decline in sales during the quarter. This was on account of a 15% QoQ decline in the transaction services segment. Its net profits increased marginally by 0.5% QoQ during the period. The IT solutions business grew by around 7% QoQ during the quarter. The company’s operating margins declined by 0.8% QoQ. Net profits grew by 0.5% QoQ. This was mainly due to higher other income as well as deferred tax gains, which offset the impact of lower operating margins for the company.