Gaining momentum...

The market made further inroads into the positive territory during the previous hour of trading. Apart from buying in index heavyweights, interest in stocks from the software, FMCG and telecom sectors has propped up gains. Auto and steel stocks are however, trading weak.

The BSE Sensex is trading at 6,349 (up 50 points) and the Nifty is trading at 1,968 (up 18 points). The rupee is trading at Rs 43.66 per US Dollar.

Currently all auto stocks are trading in the red and major losers include Tata Motors (1%), Hero Honda (HROH.BO, news) (1%) and M&M (1%). As per a leading business daily, Tata Motors is planning to pursue guarantee claims from Phoenix Venture Holdings, the owners of the now bankrupt MG Rover. Tata Motors had entered into an agreement with MG Rover for export of 100,000 Indica in the European markets over a period of 5 years. Similarly it also entered into a distribution arrangement of Tata Safari and other vehicles. The management has informed that they have terminated their agreement with MG Rover and are not to lodge any claim on MG Rover. The termination of the agreement is negative for Tata Motors as they were aiming significant revenues from this venture.

Banking stocks barring HDFC Bank (HDBK.BO, news) (down 1%) are trading firm. UTI Bank (UTBK.BO, news) , one of the new generation private sector banks, announced subdued results yesterday. It has posted a 33% YoY growth in its bottomline for 4QFY05 as compared to the 60% growth witnessed in 3QFY05. Despite 67% YoY growth in credit, the bank has posted operating margins of barely 6.1% for 4QFY05 and a dip of 18.0% YoY in operating profits. The growth in margins is primarily subdued due to the rise in interest expenses and operating expenses. The contribution from the other income side continues to be generous with the bank capitalizing on fee-based revenues (97% YoY). The fall in yields have taken a toll on the bank's net interest margins (NIM) that dipped further from 2.9% in 3QFY05 to 2.6% in this quarter. The fall in the current financial year has been significant considering that NIM at the end of 4QFY04 was 3.4%. The stock is currently trading marginally up.

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