Wednesday, April 22, 2009

Closing Bell 22 April 2009

Closing Bell 22 April 2009

Although ending the day in the red, the Indian markets pared some of their losses during the final hour of trade on account of buying activity at lower levels. The BSE-Sensex closed with losses of around 80 points, while the NSE-Nifty closed lower by about 30 points. Stocks from the mid-cap and small-cap space ended the day in the red as well. Barring stocks from the FMCG and IT space, selling activity was witnessed in stocks across sectors, led by realty and capital goods.

Other Asian markets ended the day on a mixed note. The European indices are currently trading mixed as well. Rupee was trading at 50.31 against the US dollar at the time of writing.

Marico announced its FY09 results today. On a consolidated basis, the company’s topline grew by 25% YoY led by robust growth across its product portfolio. Further, the company witnessed robust volume growth of 12% YoY. The international business (19% of total sales) reported a 43% YoY jump over the previous year, while Kaya saw a 57% YoY growth. Marico witnessed stable margins during the full year at the consolidated level. The company’s profits the profits increased by 16% YoY (excluding extraordinary items). The company has entered into an agreement to divest its entire stake in Sundari LLC, its US based spa products business, subject to regulatory approvals. Sundari constituted only a small share of its revenue. The management expects strong growth to continue, albeit at a lower rate. The stock of Marico ended the day on a firm note along with its FMCG peers Pidilite Industries and Colgate.

As per a leading business daily, Wipro has acquired the mobile broadcasting solution unit of handset maker, Nokia. This unit develops software and hardware that enables access to broadcasting network technology on its cellular phones. However, the financial details of the acquisition have not yet been disclosed. This is the second such acquisition by Wipro in Nokia’s assets in the recent years. It may be noted that Wipro has been the key development partner when Nokia started this business unit six years ago. However, the market of the technology is non-existent in India due to various regulatory restrictions. But once the 3G technology is rolled out within the next few years, the demand for such technology is likely to increase. It may be noted that BSNL has already rolled-out its 3G spectrum services in select places. The stock of Wipro ended the day on a firm note along with its peer group company Infosys.

As per a leading business daily, the RBI and Ministry of Finance expect India’s GDP growth to remain at 6% even in the worst case scenario during FY10. It may be noted that economic bodies like World Bank and IMF have projected growth rate of nearly 5% for India in this fiscal while predicting the world economy to contract by 0.5% to 1.7% for the first time in 60 years. According to the chief economic advisor of India, India could grow at a rate of 7% if the global economy begins to recover post September 2009.

The markets continued their southward journey on account of sustained selling activity witnessed during the previous two hours of trade. Stocks from the software, construction and auto sectors are leading the pack of losers, while select stocks from the engineering, cement and power sectors are trading firm. The overall decline to advance ratio is poised at 1.6 to 1 on the BSE.

The BSE Sensex and the NSE Nifty are trading lower, down by 150 points and 65 points respectively. The BSE Midcap and Smallcap indices are trading lower by 1.5% and 1.8% respectively. The rupee is trading at 50.16 to the dollar.

Auto stocks are trading lower led by TVS Motor, Hero Honda and Bajaj Auto. Hero Honda announced its 4QFY09 results yesterday. It recorded an impressive performance during quarter, with its bottomline surging 35% YoY on the back of a mere 23% YoY jump in topline. Operating margins expanded by 1.2% to 16% during the same period. For the full year FY09 the company recorded a 20% YoY growth in topline on the back of a 12% growth in volumes. Tight control on costs has enabled the company to expand EBITDA margins by 1.1%, resulting in 30% YoY jump in operating profits in FY09. The bottomline growth stood at 32% YoY backed by lower tax outgo and higher operating profits. The board has recommended a dividend of Rs 20 per share for FY09.

Pharma stocks are trading mixed. While Dr Reddy’s and Wockhardt are trading higher, Ranbaxy and Sun Pharma are trading lower. As per a leading business daily, Indian authorities have rejected the patent applications of GSK Pharma's anti diabetic drug 'Avandia' and Pfizer’s cholesterol lowering drug 'Caduet' as they did not complete the criteria of being new and more useful than the existing compounds. This is a positive move for the domestic companies like Dr Reddy’s, Torrent Pharma and Sun Pharma. It will allow them to manufacture and sell generic versions of these drugs in India. It may be noted that if GSK Pharma and Pfizer would have been successful in getting the patents, it would have ensured that others could not have made them without their consent for the next 20 years.

The markets gave away its early gains and entered into negative territory on account of selling pressure across the index heavyweights. While stocks from the banking and software sectors are leading the pack of gainers, stocks from the automobile and consumer durable space are bearing the brunt. The overall advance to decline ratio is poised at 1.3 to 1 on the BSE.

The BSE Sensex and the NSE Nifty are trading lower, down by 5 points and 15 points respectively. The BSE Midcap and Smallcap indices are trading flat. The rupee is trading at 50.16 to the dollar.

As per a leading business daily, Tata Motors is planning to launch of its high-profile ‘world truck’ by the end of May 2009. The company is likely to phase out its existing heavy and medium-range trucks, replacing them with the world truck. The company is developing the world truck along with its subsidiary Daewoo Commercial Vehicles on a completely new platform. The world truck will have models up to 300 horse power (HP). It will be priced at a premium of 5-10% compared to its existing range, as it will have more features. These trucks will compete with the likes of Volvo, Nissan, Mercedes Benz and MAN. The company is planning to launch lower HP models in India and the higher HP models in the global markets. The company earns more than 60% of its revenues from the truck segment. The stock is trading flat.

Software stocks are trading mixed. While Wipro, Mphasis and Infosys are garnering investors interest, HCL Tech, Satyam and Tech Mahindra are at the receiving end. Wipro announced its full year results today. The topline of the company grew by 28% YoY during FY09. However, topline declined by 2.3% on sequential basis during 4QFY09. The revenues from the IT services business recorded a 3% QoQ decline during the quarter. The operating margins remained flat at under 20%. The net profits grew by 19% YoY during the fiscal; however, it remained flat during the quarter owing to decline in other income on the back of forex losses. The company added 110 new clients during the fiscal. The revenue guidance for IT service business for 1QFY10 is US$ 1,009 m to US$ 1,025 m, which is lower than its earlier estimates. The board of directors has recommended a dividend of Rs 4 per share (dividend yield of 1.4%).

Taking cues from their global counterparts, the Indian markets began the day on a firm note. The overall advance to decline ratio is poised at 2.9 to 1 on the BSE. Buying activity is being witnessed across sectors led by realty and banking. However, stocks from the FMCG space are bearing the brunt of profit booking. Yesterday, the US markets ended on a firm note, while the European markets closed mixed. The Asian indices are currently trading mixed as well.

The BSE Sensex and the NSE Nifty are trading firm, up by around 90 points and 25 points respectively. The BSE Midcap and Smallcap indices are also trading firm, up by 1.7% and 1.4% respectively. The rupee is trading at 50.4 to the dollar.

Cement stocks are trading mixed. ACC and Ambuja Cements are trading firm, while UltraTech Cement is trading weak. UltraTech Cements announced its 4QFY09 and FY09 results yesterday. The company’s topline recorded a growth of 16% YoY each during 4QFY09 and FY09. The growth is on account of higher volumes and higher cement prices. However, operating margins declined by 2% YoY to 28.7% during 4QFY09 on account of rising cost of operations. Higher depreciation and interest charges have also dented profits, which grew by a mere 9% YoY during 4QFY09.

Software stocks are also trading mixed with Wipro and Tech Mahindra trading firm and Satyam trading in the red. As per a leading business daily, Tech Mahindra has announced an open offer to acquire an additional 20% stake in its recent acquisition, Satyam Computers. The company has a 31% stake in Satyam which will be raised to 51% after the open offer, which will start on June 12 and close on July 1. The offer is for 199 m shares at Rs 58 per share.

Compiled and Brought to you by 

Equity Research Team

Intelligent Investor -
Invest Advisory Arm of

Ravina Consulting
Bangalore India

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