Thursday, February 26, 2009

Closing Bell 26-02-09

After opening the day on a weak note, the Indian indices languished in the red thereafter. However post the morning session, markets gained momentum as buying activity intensified. During the final hour of trade the markets managed rise above the dotted line and end the day on a positive note. The Sensex closed higher by around 50 points, while the Nifty closed higher by around 30 points. Stocks from the BSE Midcap index ended the day on a positive note, while stocks forming part of the BSE Smallcap index ended the day on a weak note. Further, stocks from the auto and energy space led the pack of gainers, while stocks from the banking and realty led the pack of losers. Rupee closed at 50.3 against the US dollar. The Asian markets ended on a mixed note today. The European indices are currently trading mixed.

Inflation for the week ending February 14 has further fallen to 3.36% as compared to 3.92% in the week ending February 7. The numbers are lower due to price cuts in fuel, primary articles and the manufactured goods. With inflation within the RBI’s comfort zone, the possibility of cut in key rates is high.

Auto stocks ended the day on a positive note led by Tata Motors, Ashok Leyland and Bajaj Auto. The stock of Tata Motors ended the day on a positive note on news of it announcing the official launch date of the much awaited ‘Nano’. As per a leading business daily, the Rs 100,000 car is to be officially launched on 23rd March. Subsequently, the car is expected to be displayed in stores from the first week of April and bookings are expected to begin thereafter. The booking process and other details will be announced on 23rd March. As per a statement by the company, it is making arrangements for the widest possible network to book the car. In addition, the company also launched a new car recently. It is called the ‘Xenon XT’, which is a lifestyle pickup truck. In addition, the company also has other launches lined up including a utility vehicle, which would be on a brand new platform.

The job situation in international markets seems to be worsening. As per a leading business daily, about 20,000 Indians have returned home after losing their jobs overseas due to the global economic crisis.

The management of Piramal Healthcare has clarified the news item reported in the business daily regarding French major Sanofi-Aventis offering the highest price to buy a substantial stake in Piramal Healthcare. However, as per the management, it has no intention to dilute current ownership levels.

The Union Cabinet has today approved a hike in the dearness allowance by 6%. The new rate of 22% will be applicable from January this year. This is likely benefit 5 m employees and nearly 4 m pensioners. The additional spending would amount to Rs 60 bn. It may be noted that this would further impact government’s deficit which has already mounted on account of various stimulus packages announced recently.

Though the markets continued to trade in the negative territory during the previous two hours of trade, they managed to shed some of their earlier losses. Stocks from the pharma, banking and energy sectors are leading the pack of losers, while select stocks from the auto, telecom and software sectors are trading higher. The overall decline to advance ratio is poised at 1.5 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty are trading lower, down by almost 35 points and 6 points respectively. The BSE-Midcap and BSE-Smallcap indices are trading flat. The rupee is trading at 50.27 to the dollar.

Media stocks are trading mixed. Zee Entertainment, Sun TV and Dish TV are trading higher, while Network 18 and NDTV are trading lower. As per a leading business daily, the Telecom Regulatory Authority of India (TRAI) has recommended that broadcasters should not be allowed to control more than 20% equity stake in any distribution platform and vice versa. Platforms include cable, DTH, headend in the sky (HITS) and mobile TV. 

Companies which already have such cross-media control have been given three years to restructure their operations. It may be noted that many large media players like Sun TV and the Zee group would have to restructure their operations as they have presence in both the segments. While the recommendation is not yet binding, it will have a negative impact on cross-media broadcasters. In fact, the broadcasters have been trying to build economies of scale through their distribution presence in the face of fragmented viewership patterns.

Software stocks are trading mixed. TCS and Infosys are trading higher, while Wipro is trading lower. TCS has received a contract from Singapore Airlines to provide IT services for three years. It may be noted that TCS was finalised after a fresh round of selection from prospective vendors. TCS has been providing IT services to Singapore Airlines for the past twelve years. In fact, TCS and Singapore Airlines had set up a joint venture company in the early 90’s, which was later acquired and integrated into TCS in 2006. The travel and transportation sector contributed around 4% of the total revenues of TCS in FY08 and is emerging as a key business vertical. As such, retention of Singapore Airlines bodes well for the company.

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