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Banking, engg stocks lead gains
Mon, 30 Jul 01:30 pm

The Indian share market continued to gain momentum as buying activity increased during the post noon trading session. Stocks from across the board seem to be in favour today with those from the banking, capital goods and realty spaces leading the pack of gainers. FMCG and oil & gas stocks are amongst the top underperformers at the moment.

The Sensex today is trading higher by about 255 points while the NSE-Nifty is trading up by about 85 points. The BSE Mid Cap and BSE Small Cap indices are trading higher by about 1.1 and 0.7% respectively. The rupee is trading at 55.46 to the US dollar.

Stocks of engineering companies are trading firm led by Punj Lloyd, Larsen & Toubro and Bharat Heavy Electricals Ltd. Engineering and construction major Hindustan Construction Company (HCC) announced its results for the quarter ended June 2012 recently. The company reported a standalone revenue decline of 8% YoY. While the company managed to lower the operating expenses as well, it did so by about 2% YoY only, leading to an operating profit decline of sharp 51% YoY. Operating margins stood at 7.1% as compared to 13.3% during the corresponding quarter last year. Lower operating profits coupled with high interest costs led the company to report a loss at the profit before tax level. HCC reported a net loss of Rs 310 m as compared to a profit of Rs 29 m during 1QFY12. As per the company, order book at the end of the quarter stood at Rs 150.2 bn (excluding L1). The company is believed to be L1 on orders worth Rs 34 bn.

Stocks of FMCG companies are trading firm led by United Spirits, United Breweries and ITC. Nestle announced its results for the quarter ended June 2012. Led by a 13.7% YoY rise in domestic revenues, the company posted a 12.7% YoY increase in topline. Lower exports to affiliates resulted in a marginal downfall in export turnover during the quarter. Operating margins improved by 210 basis points (2.1%) on the back of higher realizations and a favourable product/channel mix. However, at the net level margins remained static at 12.3% due to a steep jump in interest outgo and higher depreciation charges. Higher external commercial borrowings (ECB) to fund capex plans coupled with a weak rupee led to a 37 folds jump in interest cost during the quarter. The outstanding borrowings as on 30th June stood at Rs 10.8 bn. The depreciation outgo was up by 84% after the recent commissioning of the Tahliwal facility.

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