The Indian markets have started today's session on a positive note. The benchmark indices opened at the breakeven mark but soon moved into the green. They have managed to hold on to their gains since then. Other key Asian markets are in the red with China (down 1.2%) leading the pack of losers. The US markets closed lower by 1.1% yesterday.
Currently in India, heavyweights from the BSE-Sensex are trading strong with auto and construction majors attracting investors' interest. The BSE-Sensex is trading higher by around 67 points, while the NSE-Nifty is up by about 25 points. Buying interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.8% each. The rupee is trading at 47.02 to the US dollar.
Engineering stocks have opened the day on a positive note. Gainers here include Alfa Laval and Engineers India. Punj Lloyd announced its FY10 results. The company witnessed a revenue decline of 12% YoY during the year on the back of slower execution coupled with foreign exchange issues. At the operating level, the company reported a contraction in margins during FY10. Consolidated operating margins stood at 1.2% during the year as compared to 2.3% last year. While subcontracting charges decreased by 31% YoY in absolute terms, raw material costs and cost of goods sold, employee costs and other expenses rose as percentage of sales. During the year, the company was significantly impacted by cost overruns in a few projects. Punj Lloyd earned an extraordinary income to the tune of Rs 3.2 bn on account of its stake sale in Pipavav Shipyard. The company reported a negative bottomline during FY10.
Steel stocks have opened the day on a positive note. Gainers here include Sesa Goa and NMDC. As per a leading business daily, public sector steel giant SAIL has cut prices of its products by Rs 1,000 to Rs 1,500 per tonne with immediate effect. In fact, the union steel secretary has said that steel prices might fall further by another Rs 1,000 per tonne during the month. Global prices have been declining due to the sovereign debt crisis in Europe. Demand for steel in India generally slows down ahead of the monsoons. Little surprise then, prices of long steel products used in infrastructure and construction have already fallen by Rs 5,000 per tonne in the last two months. Currently, steel prices are hovering in the range of Rs 32,000 to Rs 47,000 per tonne. Taking cues from SAIL, private steel makers such as Tata Steel and JSW steel are likely to follow suit. To make life difficult for steel makers, input cost of iron ore and coking coal has remained firm during this period thereby affecting their operating margins.