India Markets Friday Wrap-Up: Autos Drive the Markets Higher

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 |  Includes: EPI, ICN, IFN, IIF, NVS, PFE, RDY, SNY, TTM
by: Equitymaster

Led by gains in auto and banking stocks, Indian markets closed strong today. IT and telecom stocks were among the few losers. On the broader BSE, one stock gained for one that closed in the red. The BSE Sensex and NSE Nifty closed with gains of around 85 points (0.5%) and 15 points (0.3%) respectively. Midcap stocks followed suit, as the BSE Midcap index closed up by 0.7%. The rupee was trading at 45.33 to a US dollar at the time of writing.

Auto stocks closed strong today. In fact, the BSE-Auto index was the top gainer (up 1.7%) among all BSE indices. Key gainers from the sector included Bajaj Auto, Tata Motors (NYSE:TTM), and Maruti. Gains in Maruti followed reports that the company is looking to hike its car prices as BS4 (Bharat Stage 4) emission norms get implemented from April this year. BS4 will be applicable to NCR (National Capital Territory of Delhi) and other ten cities like Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur and Agra.

The company has not quantified the extent of the price increase due to application of this new norm. In an interview with The Economic Times, Maruti's Chairman, Mr. RC Bhargava has also hinted that with interest rates going up or likely to go up in the course of this year, it will also put some upward pressure on car prices. Keeping all that in mind, he does not expect the total demand growth to be anywhere near what the sector has witnessed in FY10. In fact, he would be surprised to see an even 10% YoY growth next year (FY11).

Pharma stocks closed mixed. While gains were seen in Novartis (NYSE:NVS) and Aventis (NYSE:SNY), selling pressure marked trading in Pfizer (NYSE:PFE) and Dr. Reddy's (NYSE:RDY). Earlier, Pfizer announced its 1QFY10 results. The company works on a financial year that ends in November. Its sales and profits have each grown by 9% YoY. Operating margins have improved to 25%, from 23% in 1QFY09.

The company has forayed into branded generics in a bid to gain access to a wider market and bolster sales. Two products have already been launched in this category. It is also looking to increase its reach to doctors and the focus will be more on metros and tier I, II, III and IV cities before it ventures into rural areas.