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Flat with negative bias
Thu, 14 Oct 11:30 am

After starting today’s session on a positive note, Indian indices have lost initial ground. However, other key Asian markets are trading strong with both Nikkei and Hang Seng registering healthy gains. Currently, heavyweights in the Sensex are trading mixed with stocks from the oil & gas and consumer goods space bearing the brunt of investors. However, realty and IT stocks are trading strong.

Currently, the BSE-Sensex is trading down by around 30 points, while the NSE-Nifty is down by about 2 points. However, there has been buying interest amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.3% respectively. The rupee is trading at 44.18 to the US dollar.

Telecom stocks are mainly trading weak with MTNL and RCOM leading the pack of losers. As per a leading news daily, a high level DoT panel has made recommendations to bring an end to the roaming charges customers pay when they travel outside their home circle. Currently, there are 22 circles in India and customers have to pay roaming charges when they make or receive calls outside their home circle. DoT panel has made recommendations to bring an end to this circle roaming concept and has proposed a regional concept. This will help consumers avoid the roaming charges when travelling within a particular region; say Western part of India. We believe this move is likely to hurt all the mobile companies including Bharti Airtel, RCOM and Idea Cellular as roaming charges constitute upto 10% of the industry’s revenues.

Castrol announced its 3QCY10 results recently. The topline increased 14% YoY on the back of higher realisations. However, the company saw a sharp increase in its raw materials cost driven by rising base oil and other input costs. Despite this, Castrol managed to grow EBITDA margins through a combination of premium product mix, and strategic pricing actions. In line with operating margins, bottomline too registered a growth of 22% during the quarter.

Going forward, the company intends to focus on the strategic growth areas like cars, motorbikes and tractors, where it expects to grow in volume and value terms. However, it is not looking out for expansion in the distribution sector in the near term.

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