Realty weighs on the markets

Thu, 28 Apr 09:30 am

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Asian stock markets have opened the day on a good note. Most benchmark indices are trading in the green with Japan (up 1.3%), Hong Kong (up 0.4%) and Singapore (up 0.4%) leading the gains. However, stock markets in China (down 0.1%) are trading in the red. The Indian stock markets have opened the day on a negative note. Stocks in the realty and technology space are leading the losses.

The BSE-Sensex is trading lower by around 14 points (0.1%), while the NSE-Nifty is down by around 7 points (0.1%). Midcap and small cap stocks are trading in the positive however, with the BSE Midcap and BSE Small cap indices up by about 0.1% and 0.3% respectively. The rupee is trading at 44.27 to the US dollar.

Energy stocks have opened the day on a mixed note. On one hand, ONGC, HPCL and IOC (Indian Oil Corp.) are trading in the green. On the other hand, BPCL and Cairn India have opened the day in the red. Castrol India has announced its first quarter (1QCY11) results for the financial year 2010-2011 (Note: the company has a December year ending). The company has reported a 14.8% YoY increase in revenues during the quarter. The growth was driven by higher volumes. There was a positive traction in each of its segments. Sales from the automotive segment registered a growth of 15% YoY during the quarter. The non-automotive segment registered a growth of 48% YoY. Due to better pricing, the company was able to register an increase in operating profits despite the steep increase in raw material prices during the quarter. However, operating margins declined to 24.2% as against the 27.4% seen during the same period last year. Net profits increased by 16.6% YoY during the quarter. The company has been able to pass on increase in costs to its customers through higher pricing. With crude prices hitting new highs, it remains to be seen whether the company would be able to pass on costs in the future as well.

Cement stocks have opened the day on a weak note. India Cements, JK Lakshmi Cements and Madras Cements are leading the losses. However, stocks of Prism Cement and Chettinad Cement are witnessing buying interest. Ambuja Cements recently announced its 1st quarter 2011 (1QCY11) results (the company has a December year ending). The company has reported 10.9% YoY increase in sales mainly on the back of higher volumes. While sales volume increased by 6.8% YoY, cement realizations improved marginally by 3.8% YoY. The company's operating costs increased 16.7% YoY on mainly due to higher power and fuel costs. Depreciation charges were higher during the quarter due to capitalization of a new project in March 2011. As a result, net profits declined by 11.8% YoY during the period. The net profit margin declined from 23.2% in 1QCY10 to 18.5% in 1QCY11.