The Mint Report for 03 October 2011

The Mint Report for 03 October 2011

Low cost carrier Indigo, is flying high! At a time when rising input costs have bruised other airline operators, the carrier’s profits rose to 650 crores from last year’s 550 crore. This 18% increase in profits is largely due to jump in revenues and premiums from aircraft sales.Indigo that kick started its international operations last month, plans to continue its focus on the domestic market.

However, in pursuit of its overseas forays, it plans to deploy about 18% of its feet capacity on international routes. The company feels that its low cost model is the principal driver of its profitability. This is the third consecutive yearly profit for the low-cost airline at a time when all its competitors except SpiceJet have posted losses.

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The purchasing mangers’ index came out on Monday confirming that India’s factory output has slowed down to its lowest in 30 months. September’s lax pace of growth was on account of the slew of interest rates hikes that dampened economic activity.

The HSBC India Manufacturing Purchasing Managers’ Index slid more than two points to 50.4 from 52.6. The September Finding, based on a survey of data from more than 500 firms, showed the index plunging its sharpest level in a month since November 2008, from 56.0 to 51.1. A similar PMI survey released on Friday showed manufacturing in China contracting for a third month, raising fresh concerns over the ability of emerging markets to offset weaknesses in advanced economies.

Some good news for the export sector. The sector enjoyed record growth in the last fiscal year fuelled by demand for cars, petroleum products and precious stones. India’s August exports rose 44.25% to $24.3 bn from a year earlier. The imports for the month rose 41.82 % to $38.4 bn, leading to a trade deficit of $14 bn. However, the commerce ministry feels that growth in the coming months will be difficult on account of uncertainty in Western markets.

The auto industry is breathing a sigh of relief as sales figure in Sep were back on track after a sharp decline in July & Aug. It was the onset of festive season buying coupled with a host of launches that helped companies gather fresh momentum. But the country’s top passenger car maker Maruti Suzuki bucked the trend as production suffered following the strike in its Manesar plant. It sales tumbled 21% from a year ago to 85,565 units this year.

Other companies though, have reasons to cheer. Tata Motors saw a rise of 22% YOY to 78,786 units. Its commercial sales were up 29%.M&M’s sales during the month went up 25% to 44,137 units. Sales at Hyundai Motor India also rose over 12% to 57,808 units, While Toyota Kirloskar sales doubled to 12,807 units, thanks to the Etios & the Etios Liva.Two wheeler companies also showed strong growth signs. Bajaj Auto sales rose 18.5% to 4.18 lakh units in September while TVS Motors sales rose 17% to 2.19 lakh units. Overall, the auto sectors ended in the green. Hero Motocorp ended the day’s trade at 1958.70 while M&M closed for the day at 809.35.

Monday markets closed in the red parodying extreme weakness in the European markets.

The Sensex ended at 16151.45 while the Nifty ended the day’s trading at 4849.50.

The CBI clean chit to Anil Ambani in the 2G scam case, sent stocks of Reliance Group in the green. Reliance capital gained 1.6% on the BSE to close at 320.25, Reliance Communication was up at 72.30, Reliance Infra gained 1.27% to close the day’s trade at 378.30, Among the IT sector stocks, only TCS gained, up a 1044 points on the BSE.

On the flipside, metal stocks melted further as the day progressed. The biggest blow was felt by JSW Steel following a CBI raid on its Vijaynagar plant. Its stock hit a ten year low of 549.50, falling 7.7%. Another major, Tata Steel stocks plunged 4.95% to 394.70.

The banking sector was also laid low. Shares of the country’s largest private sector lender ICICI Bank ended in the red at 839.25. HDFC Bank was another big loser with its stock falling to 458.45.