14:22
Moneycontrol BureauLive Market Commentary
02:25pm Ceat Boardroom
Ceat shares have nearly doubled over the last month as investors see the company's profits rising due to low rubber prices. The company some time back had decided to import natural rubber to gain from cheaper prices. This year so far, the company has imported roughly half its rubber requirements. A Subba Rao, CFO says he is flexible on this strategy and it would be driven by cost advantages.
Rao says tyre companies abroad don't see too much volatility in profit margins even if rubber prices fluctuate sharply. Indian companies too will have to learn to overcome these raw material cost increases and maintain profit margins.
Rao sees second half earnings and margins to be in line with those seen in the first half.
Around 30 percent of Ceat's revenues come from vehicle manufacturers, and the rest from the replacement market. "Auto industry has been going through one of its worst periods in the last decade; commercial vehicle growth – there is a negative growth of 25 percent for the second successive year, so passenger car sales is just at the breakeven level as compared to last year," he says. Rao doesn't expect any substantial improvement in demand from the OEM side, but he is trying to get new customers from the OEM segment.
02:15pm Equity benchmarks lost more than 1.5 percent in afternoon trade on fears that Fed tapering may start earlier-than-anticipated. All sectoral indices are in the red.
The Sensex is down 318.46 points at 20316.67, and the Nifty is down 96.80 points at 6026.10. About 822 shares have advanced, 1395 shares declined, and 142 shares are unchanged.
According to Laurence Balanco of CLSA, ultimately a break below 6,008-6,107 support should result in move down to the 5,870-5,880 area over the coming weeks. "This means is that the Nifty is likely to remain rangebound below the 6,330-6,340 resistance zone into 2014," he adds.
The biggest loser in the Sensex was HDFC with a 3 percent cut followed by Infosys , ITC , Sun Pharma , L&T, NTPC and Sesa Sterlite with a 2-2.5 percent loss.
Meanwhile, the rupee declined 31 paise to 62.88 against the US dollar.
Nizam Idris of Macquarie says dollar rupee will be stuck within that 62-64/USD range for now. He does not see massively strong data coming out of the US. He continues to expect tapering in March from the Federal Reserve.
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