The Indian markets continued to slide deeper into the red as selling activity intensified during the previous two hours of trade. Selling pressure is being witnessed in stocks from the IT, energy, auto and banking spaces, while those from the realty, consumer durables and FMCG sectors have managed to find investors’ interests.
The BSE-Sensex and the NSE-Nifty are currently trading lower by around 110 points and 40 points respectively. However, small and midcap stocks have managed to hold on to their gains as the BSE-Midcap and the BSE-Smallcap indices are trading higher by 0.3% and 0.2% respectively. The rupee is trading at 45.82 to the US dollar.
Auto stocks are currently trading weak led by Eicher Motor, M&M and TVS Motor. However, commercials vehicle manufacturer Ashok Leyland has managed to buck the trend as the company announced a strong sales volumes growth for the month of February 2010. The company reported an over 140% YoY increase in unit sales as compared to the same month last year. Sales during the month stood at 7,869 units while they stood at 3,245 units last year. The growth in volumes was mainly on account of a spurt in domestic sales which grew by about 165% and formed nearly 90% of total sales volumes as compared to about 82% last year. Exports also grew at a strong pace, higher by about 35% YoY. The cumulative sales during the year till date i.e. from April 2009 till February 2010 at 53,859 units as compared to 49,332 units, representing a growth of about 9% YoY. Sales of medium and heavy commercial vehicles contributed to nearly 68% of sales and reported a growth of about 270% YoY. Key reason for this strong surge is the low base of last year, coupled with the overall improvement in economic conditions over the past few months. It must however be noted that when compared to sales on a month on month basis i.e. in comparison January 2010, the sales volumes remained flat.
The stock of Punj Lloyd is amongst the top losers from stocks forming part of the BSE-Capital Goods Index. This is on the back of the company’s announcement that Simon Carves, its UK subsidiary, has been fined a sum of Rs 1.6 bn for delays in execution of a particular project in the UK. Punj Lloyd was believed to be in talks with its client in the UK. However, the decision seems to have gone against the company. It must be noted that Punj Lloyd has already provided for losses to the tune of about Rs 3 bn on this project on the back of cost overruns in the financial year till date. This additional sum will be an additional cost to these losses.
While the company has blamed the extreme weather conditions in the UK for the delay in the same, it should be noted that the company also reported losses during FY09 on account of the legacy orders of Simon Carves. In another development, the company reported that it received a letter of intent (LOI) for an order worth over Rs 10 bn from Dhariwal Infrastructure, a subsidiary of CESC to construct a 600 MW power plant in west Maharashtra.