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Banking, auto stocks pull markets lower
Fri, 10 Aug 01:30 pm

The Indian equity markets dived deeper into the negative territory as selling activity intensified during the post noon trading session. Barring the large cap IT stocks and FMCG stocks, all other sectoral indices are trading weak led by the auto and banking indices.

The Sensex today is trading lower by about 65 points (down 0.4%) while the NSE-Nifty is trading down by about 15 points (down 0.3%). Midcap and smallcap stocks are also not in favour today as the BSE Mid Cap and BSE Small Cap indices are trading lower by about 0.3% each. The rupee is trading at 55.4 to the US dollar.

Auto stocks are currently trading weak led by TVS Motors, Hero Motocorp and Tata Motors. Tata Motors announced its results for the quarter ended June 2012 yesterday. The company's consolidated revenues improved by 30% YoY, while expenses increased by a marginally slower pace leading to a higher growth in operating profits. The company's operating margins expanded by 0.6% YoY to 13.3% during 1QFY13. The margin expansion was largely on account of lower raw material and purchase costs (as a percentage of sales). At the net level, Tata Motor's profits grew by 12% YoY during the quarter. While the company reported a strong operating performance, higher exceptional losses (including those on revaluation of foreign currency borrowings, deposits and loans), taxes and depreciation charges brought down the overall tax growth. Tata Motor's sales volumes (excluding those of JLR, but including exports) stood at 190,483 units. This figure is lower by 3.6% as compared to the corresponding quarter last year. As for JLR's global sales, the same grew by 34.4% YoY to 83,452 units, with Jaguar contributing to about 14% of volumes and Land Rover contributing the rest.

Stock of information technology stocks are trading mixed with oracle Financial Services, Tech Mahindra and TCS trading firm while NIIT Technologies, Mphasis and NIIT trading weak. Tech Mahindra announced its results for the quarter ended June 2012 recently. The company's consolidated net sales grew by 8.8% QoQ. Growth was largely attributable to the rupee depreciation during the quarter as revenues in US dollar terms remained flat. The company's operating profits increased by 38% YoY on the back of a 4.5% QoQ margin expansion to 21.4%. The same is attributable to lower cost of services as well as lower 'Selling, General & Administration' (both as percentage of sales) during the quarter. Tech Mahindra's profits however grew at a slower pace of 11.9% QoQ on the back of lower contribution to the share of profits from its associate Mahindra Satyam during the quarter. In addition, higher interest costs impacted the performance at net level. The total number of active clients remained flat at 130 during the quarter.

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