Indian stock market indices are trading weak over the last two hours of trade on the back of sustained selling activity across index heavyweights. Metal and Oil and Gas stocks witnessed maximum selling pressure.
Steel stocks are trading weak led by Sesa Goa and NMDC. According to a leading financial daily, the follow on public offer (FPO) of Steel Authority of India (SAIL) has met with more hurdles. This is because SAIL does not want to raise fresh equity in the view of capital requirements, surplus cash and choppy markets. The finance ministry was planning to divest 10 % in SAIL in two separate tranches, while the company would also raise additional equity of to the extent of 10 %. Now the ministry will take the Cabinet nod once again to sell its stake through a follow-on public offer. The government holds 85.82% stake in SAIL. A 5% stake sale will fetch it over Rs 20 bn at the current market capitalization. The government was hoping to fetch Rs 40 bn from the stake sale.
Auto stocks are trading in the red. Maruti Suzuki and Eicher Motor are the biggest gainers while Hero Motocorp and Tata Motors are biggest losers. Hero Motocorp has declared results for the quarter ended September 2011. The company has reported a growth of 28% YoY and 19% YoY in sales and net profits respectively. The growth in revenues was due to 20% increase in sales volumes. The company sold over 1.5 m units during the quarter and had sold around the same number of units in 1QFY12 as well. Operating margins increase by 2.4% YoY to 15.8%, on the back of lower staff costs and significant reduction in other expenditure. Operating profits grow by 51% YoY during 2QFY12. Net profit growth at 19% YoY is slower than the growth in operating profits on account of a surge in depreciation charges.