No respite for Indian indices

Fri, 29 Apr Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

After being mired in losses for four consecutive days, Indian stock markets languished in the red in today's trading session as well. Although the morning session saw some attempts being made to push into the positive, these proved futile as the indices closed well into the red in the final trading hour. While the BSE-Sensex closed lower by around 156 points (down 0.8%), the NSE-Nifty closed lower by around 36 points (down 0.6%). Both the BSE Midcap and BSE Small cap were not spared either as they closed lower by 1% and 2% respectively. Barring FMCG and healthcare stocks, losses were seen across sectors.

As regards global markets, Asian indices closed mixed today while European indices have also opened on a mixed note. The rupee was trading at Rs 44.27 to the dollar at the time of writing.

The stock of TVS Motors fell by as much as 6% today. This was despite the company announcing decent results for the fourth quarter and year ended March 2011. Sales for the year grew by a robust 42% YoY as growth was witnessed across products. Total volumes during the year were up 33% YoY. Out of this two wheeler sales of the company grew by 32% YoY during the year led by both scooters and motorcycles. Three wheelers did even better as sales volumes grew by an impressive 166% YoY during the year. Operating margins, however, shrunk by 0.8% to 5.7% during the year. This was largely due to rise in raw material costs from 71.1% of sales in FY10 to 74.2% of sales in FY11. The company managed to keep all other expenses under control. As a result, operating profits grew by 25% YoY. Bottomline growth was robust at 119% YoY during the year. However, this growth was magnified on account of an extraordinary expense in FY10 and if one excludes the same, growth in net profits was still healthy at 43% YoY. This was on account of higher other income and lower depreciation costs.

Pharma stocks closed mixed today. Lupin and Piramal Healthcare found favour, Dr.Reddy's and Biocon closed into the red. As per a leading business daily, Biocon would be divesting its stake in German unit AxiCorp to the existing group of the German unit's shareholders. The company has not divulged the financial details of the deal. That said, Biocon had acquired 70% in AxiCorp in February 2008 in order to spearhead its strategy of launching biosimilar insulin and other biosimilars in the EU markets once the regulatory pathway there opened up. Although AxiCorp was a low margin business and was a drag on Biocon's overall profits, the company was confident of margins ramping up once it launched insulin in the European markets. Biocon, then entered into a deal with Pfizer Inc. in the second half of FY11 for commercializing Biocon's biosimilar insulin portfolio that comprises of 4 products. This was for both the regulated and the emerging markets with the regulated market opportunity opening up 2015 onwards. Although the company has not disclosed the rationale for the divestment of AxiCorp, product overlap between AxiCorp and Pfizer could be the reason for the decision.