Realty, telecom pull markets lower

Thu, 11 Nov 01:30 pm

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The Indian markets fell quite sharply during the previous hour of trade as selling activity intensified in heavyweights from the realty, telecom and energy spaces. Stocks from the IT and engineering spaces are not finding favour as well. On the other hand, metal and consumer durables stocks are trading firm, followed by select stocks from the power space.

The BSE-Sensex is trading lower by about 90 points, while the NSE-Nifty is trading lower by about 25 points. Small and midcap stocks however seem to have garnered the investors' interest as the BSE-Midcap and the BSE-Smallcap indices are trading higher by about 0.2% and 0.9% respectively. The rupee is trading at 44.28 to the dollar.

Healthcare stocks are currently trading mixed with Ranbaxy, Wockhardt and Cipla leading the pack of losers, while Lupin and Cadila Healthcare are trading firm. The stock of pharmaceutical major Ranbaxy is trading weak on the back of its disappointing performance for the quarter ended September 2010. The company's revenues grew by a mere 3% YoY during the quarter primarily due to currency appreciation and decline in sales in Europe, Africa and Asia Pacific. In dollar terms, sales growth stood at 14% YoY and was led by an impressive 70% plus growth in the US. This was largely on account of ‘Valacyclovir' which continued to enjoy a healthy market share of approximately 36%, even after loss of exclusivity and better performance by most business segments. Operating margins shrank by 4.1% YoY due to higher raw material and staff costs (as percentage of sales). Bottomline grew by an impressive 168% YoY largely due to the impact of forex gains and extraordinary income. Thus, on excluding these, net profits declined by 29% YoY on account of the 35% YoY fall in operating profits and higher depreciation charges.

Auto stocks are trading mixed with M&M trading in the green while Tata Motors and TVS Motors are facing selling pressure. A leading business daily has reported that Tata Motors is planning to build upgraded versions of the ‘Nano' with larger engines and higher price tags. The company's MD & CEO Carl-Peter Forster stated that while the Nano may be the world's cheapest car, it was also an engineering marvel and that the company wanted to leverage this forte to offer a wider range of options to its customers. Further, the company plans to do exactly the opposite for Jaguar, by launching vehicles with smaller engines and lower price tags. With this, the company plans to go down the price ladder so that the car is available for new customer groups, especially the price-sensitive younger buyers.