Markets turn in Red

Markets have shed their early morning gains, with the benchmark indices witnessing a sharp drop into the negative territory during the previous hour of trade. Selling activities are witnessed in select stocks from the energy, banking and construction sectors while buying interest is being garnered in software, auto and telecom sectors. The advance to decline ratio is almost balanced at 1.1:1 on the BSE.

The BSE Sensex is trading at 17,298 (down 81 points) while the NSE Nifty is trading at 5,168 (down 27 points). The rupee is trading at 40.41 to the dollar.

Software sector stocks are currently trading mixed with the gainers led by NIIT Technologies (up 3%) along with Polaris Software and Geometric Software (both up 2%). As per a leading business daily, 3iInfotech acquired US firm, Regulus Group LLC for the amount of US$ 80 m. The latter is present in the business of remittance processing, which is essentially a document processing service (for example utility bills, telecom bills, insurance related documents etc). This acquisition will make 3iInfotech a global player in payment processing solutions by integrating new acquired Regulus with J&B Software and its products. Regulus reported a topline of US$ 148 m in CY07 and has nearly 1,300 employees under it payroll. The company also has nearly 260 global clients present in the finance, insurance, utilities and healthcare sectors. The stock is currently trading marginally lower.

The aluminium sector stocks are currently trading weak lead by Nalco (down 3%) and Hindalco (down 2%). Nalco announced its annual and fourth quarter results yesterday. During FY08, the sales reduced by 16.1% YoY primarily due the rupee appreciation issue and descending international metal prices. It must be noted that nearly 40% revenues of the company are generated through exports, leading to the dollar depreciation hurting the company's rupee realisations per tonne. The drop in the topline and certain input costs has also led to a 15% YoY fall of the company's operating margins. In absolute numbers, the EBIDTA levels fell by almost 38% YoY. Due to the company's poor performance at the sales and operating level, the net profits and the net profit margins witnessed a fall by 32% YoY and 8% YoY respectively in FY08.