Auto stocks push markets lower

Fri, 30 Jul 09:30 am

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The Indian markets have started today's session on a weak note. The benchmark indices opened below the breakeven mark, and moved further into the negative territory. These have not managed to cut their losses since then. Other key Asian markets are in the red with Japan (down 1.5%) leading the pack of losers. The US markets closed lower by 0.3% yesterday. Currently in India, heavyweights from the BSE-Sensex are trading weak with auto and banking majors facing the brunt of selling activity. The BSE-Sensex is trading lower by around 70 points, while the NSE-Nifty is down by about 25 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% each. The rupee is trading at 46.49 to the US dollar.

Pharma stocks have opened the day on a positive note. Gainers here include Sun Pharma and Ranbaxy. Lupin announced its 1QFY11 results yesterday. The company reported a topline growth of 21% YoY during the quarter, led by growth across all business segments. Formulation sales from the US and Europe registered a robust 40% YoY growth. In the US market especially, the branded generics business grew by 51% YoY, whereas the generics business grew by 45% YoY. Operating margins expanded by 2.3% during the quarter largely due to a fall in raw material costs (as percentage of sales). The company's net profits grew by a robust 40% YoY during the period led by the strong growth in operating profits, reduction in interest costs and lower tax expenses.

FMCG stocks have opened the day on a positive note. Gainers here include Dabur and Pidilite. As per a leading business daily, Dabur plans to raise Rs 20 bn for acquisitions. The amount is in addition to the funding for the recent Hobi Kozmetik deal. The company's board approved an enabling resolution for this fund-raising two weeks ago. It would be put to vote before the shareholders at the annual general meeting next month. This move comes at a time when organic growth in India is becoming very difficult and creating and building new brands is turning costly. Moreover, valuations abroad are very lucrative. As a result, the company is actively looking for acquisitions in healthcare and personal care after a gap of three years. It had acquired Fem Care Pharma in 2008 and Balsara Hygiene and Home Products in 2005.