Indian markets may open positive.

MORNING UPDATE FEB 02, 2012

Opening Bias

The Indian markets may extend yesterday’s late noon rally and open positive. The SGX Nifty is trading up by 33 points at 5,302, indicating a gap up opening to the markets today.

In conclusion, we expect the markets to sustain the rally and remain positive today. We advise our readers to continue to book profits on counters that have yielded significant returns.

Stocks In Action

According to a BSE press release, Mahindra Satyam reported a 29 per cent (QoQ) rise in profit after tax to Rs 308 crore for the quarter ended December 31 as against Rs 238 crore in the previous quarter. The company’s Q3 consolidated revenue was Rs 1,718 crore, up by 9 per cent QoQ. It made a forex gain of Rs 66.39 crore on account of the appreciating US dollar against the rupee. The total headcount at the company was 32,280 as of December 31, 2011 – a net addition of 188 employees quarter-on-quarter. The attrition rate at the company was 16 per cent in Q3, down from 25 per cent in the corresponding period last year.

According to a BSE press release, Ashok Leyland has reported a 54.25 per cent rise in net profit to Rs 66.90 crore for the third quarter ended December, 2011 as against Rs 43.37 crore for the corresponding period last financial year. Its net sales went up by 29.30 per cent to Rs 2,879.80 crore during the quarter from Rs 2,227.25 crore in the year-ago period. During the quarter, the company sold 23,175 vehicles compared to 18,437 units in the same period last financial year, translating into an increase of 25.70 per cent. The net profit reported by the company was much below the street estimates of Rs 121 crore. In fact the company has reported a sequential fall of 56 per cent on the PAT level. On a nine-month basis too its PAT has dipped by 7 per cent. The performance has deteriorated on the back of rise in input costs, higher other expenditure component and increase in the interest outgo. We expect the counter to give up its gains on the bourses today.

According to a BSE press release, steel pipe manufacturer Welspun Corp reported a consolidated net loss of Rs 70.19 crore for the quarter ended December 2011, largely due to forex losses on account of rupee depreciation. The company had reported a net profit of Rs 146.52 crore for the corresponding quarter of 2010-11. The net sales of the company, however, rose by over 54 per cent to Rs 2,449.68 crore during the quarter under review from Rs 1,586.21 crore in the same period last fiscal. Its Q3 performance was adversely impacted by Rs 182.3 crore because of foreign exchange provision due to 8.4 per cent depreciation of the rupee during this quarter. In the October to December quarter Welspun sold 2,02,000 tonnes of pipes, an increase of about 23 per cent year-on-year, while steel plate sales stood at 1,39,000 tonnes, a growth of 12 per cent vis-a-vis the year-ago period. In addition to that, the company bagged pipe orders worth Rs 2,400 crore from domestic and international oil and gas majors during the quarter, taking its total order book to Rs 5,220 crore.

According to The Economic Times, the government has ordered a probe into Petronet LNG’s imports of liquefied natural gas following allegations that the company has quietly switched to buying lean gas, which can only be used as fuel, instead of rich gas that can also produce petrochemicals and cooking gas. We expect some negative action in the scrip.

Expect some positive action in the PSU stocks of SAIL, ONGC and BHEL, among others, as an empowered group of ministers are expected to meet soon in the coming days to decide on possible government stake auctions in the companies. The SEBI has finally given its nod to the government for going ahead with its stake auction-cum-institutional programme of disinvestment.

Corporate Action