Broad based buying aids indices

Thu, 3 Feb 11:30 am

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After starting today's session on a marginally positive note, Indian indices have gained further ground and are currently trading firm. All the sectoral indices are trading in the green with realty and metal stocks leading the gains.

Currently, the BSE-Sensex is up by 259 points while NSE-Nifty is trading 84 points above the dotted line. BSE Midcap and BSE Small cap indices are both up by 0.62% and 0.67% respectively. The rupee is trading at 45.66 to the US dollar.

Engineering stocks are trading mixed with Honeywell Automation and Sanghvi Movers leading the gains. However, Voltas and Manugraph India are trading weak. Greaves Cotton has entered into a long term agreement with M&M to supply single cylinder engines for three wheelers. The agreement is for a period of five years and the contract is on an exclusive basis where Greaves Cotton would be a single source supplier for 100% of the engine requirement of M&M. It may be noted that earlier this month the company also bagged a 10 year contract from Tata Motors to supply small diesel engines. Apart from Tata Motors and M&M the company currently meets diesel engine requirements of various companies including Atul Auto, Piaggio and Scooters India. In order to meet the growing demand for diesel engines, the company plans to build a new engine manufacturing facility in Aurangabad with an investment of Rs 1 bn. The proposed expansion will take the company's total engine manufacturing capacity to 400,000 units per annum.

Food and tobacco stocks are trading mixed with GSK Consumer and Wadala Commodities trading firm and Golden Tobacco and Tata Coffee trading weak. As per a leading financial daily, ITC is considering increasing prices of its packaged foods by 7-8%. This is due to the rise of input costs. There has been a rise of 30-35% in agricultural commodities over the past 2 years along with a rise in freight rates and packaging costs. ITC, to neutralize this rise, is considering a price hike in the coming days. It may be noted that the company is looking at a growth of 14-15% YoY in the packaged foods segment in FY12.

ITC came out with its 3QFY11 results recently. The top line grew by 18.6% YoY on the back of strong performance by the company's cigarette business (up 15.6% YoY) and foods business (up 24% YoY). Hotels and agri businesses also did well with a growth of 15% YoY and 18% YoY respectively. Net profit of the company for the quarter increased by 21.4% YoY, while net profit margins expanded by 0.6%.