Wednesday, March 4, 2009

Closing Bell 04-03-09

The indices witnessed a very volatile trading session today. Throughout the morning session, the markets languished in the red. Thereafter, volatility reigned as alternate buying and selling activity led the indices to hover around the dotted line towards the end. The Sensex closed higher by around 20 points, while the Nifty closed higher by around 25 points. However, stocks from the mid-cap and small-cap indices ended the day on a weak note. While buying was witnessed in stocks from the metal and energy sector, stocks from the banking and capital goods sectors led the pack of losers. Rupee closed at 51.81 against the US dollar. The Asian markets ended on a positive note today. The European indices are currently trading firm as well.

Energy stocks ended the day on a positive note led by ONGC and GAIL. IOC is looking to sell oil bonds worth Rs 10 to 15 bn in the open market soon. The money that will be raised by the company will be used to pay back some of its borrowings. Currently, the company has bonds worth Rs 310 bn. As per a leading business daily, IOC would be testing the markets before making such a move. However, the management has mentioned that it would sell the bonds provided it gets good returns. In another development, the company today announced that its crude oil import bill has dipped by 67% to US$ 1.5 bn per month. The reason behind the steep fall is on account of the lower crude prices. When crude prices were at their all time high, the company's import bill at that time was around US$ 4.5 bn per month.

Realty stocks ended the day on a firm note led by Akruti City and Unitech. As per a leading business daily, DLF has been refunded Rs 2 bn by the Haryana government for its proposed projects in Gurgaon. However, the company had demanded for nearly Rs 2.4 bn, which was paid as license fee. It may be noted that, prior to the real estate boom, the Haryana government used to receive license fees to the tune of Rs 4 bn to 5 bn per annum. The state government has collected nearly Rs 30 bn as license fees in the last two years. However, a handful of real estate players are now looking to seek refunds in Gurgaon alone. It is supposed that the state has received a demand for refunds to the tune of Rs 6 bn. While this may be the case in Gurgaon, considering the issues realty players are currently facing, it will not be surprising to see similar situations arise across the country going forward.

As per a leading business daily, troubled auto major, General Motors' German unit, Opel is likely to cut nearly 3,500 jobs. This move is part of the company’s cost cutting program. Currently, it has an employee base of nearly 25,000 workers in Germany. In addition, it is believed that Opel needs nearly US$ 4.2 bn as state aid from the European government. This amount will put it in a position to save jobs and keep plants open. Further, Opel is looking to relaunch itself as an independent company. As per GM’s Europe head, post the relaunch it will aim at growing its revenues by 5% YoY.

Nano to go European

The Indian markets remained volatile on account of alternate bouts of buying and selling activity witnessed during the previous two hours of trade. Stocks from the banking, engineering and power sectors are leading the pack of losers, while select stocks from the steel, cement and telecom 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 40 points and 10 points respectively. The BSE Midcap and Smallcap indices are also trading lower by 0.3% and 0.5% respectively. The rupee is trading at 51.83 to the dollar.

Automobile stocks are trading mixed. While Tata Motors and Maruti are trading higher, Ashok Leyland is trading lower. As per a leading business daily, Tata Motors plans to launch Nano, the world’s cheapest car in Europe by 2011. The Nano Europa would be different from the Nano that would be sold in the Indian markets as it would have to meet different safety and emission standards. Still, it would be priced at very affordable rates. The company is scheduled to start the sales of Nano in the Indian markets by April 2009 at a price of around US$ 2,000. It may be noted that the company currently sells around four models in the European region. This is a positive development as it would enable the company to further strengthen its presence in Europe.

Energy stocks are trading mixed. While ONGC is trading higher, RIL and HPCL are trading lower. As per a leading business daily, Reliance Industries (RIL) is likely to sign an agreement to supply gas to Ratnagiri Gas and Power (RGPPL), formerly known as Dabhol Power. RIL is expected to sell the gas to RGPPL from its KG basin fields at price of around US$ 5.40 per mBtu (million British thermal unit) that includes transportation charges and tax. It may be noted that the company is engaged in a legal battle in the Bombay High Court with NTPC and Reliance Natural Resources over the supply of gas from the same fields. The court has temporarily allowed RIL to sell the gas to meet pressing demands.

Cement prices up, stocks firm

The markets continued to trade in a narrow range during the previous two hours of trade. Stocks from the metals, realty and FMCG sectors are trading firm, while select engineering and banking stocks are trading weak. The overall market breadth is negative with losers outnumbering gainers by a ratio of almost 1.4 to 1 on the BSE.

The BSE Sensex and NSE Nifty are trading firm, up by around 10 points each. The BSE Midcap and Smallcap indices are trading lower, down by 0.1% and 0.4% respectively. The rupee is trading at 51.91 to the dollar.

Energy stocks are trading mixed. GAIL is trading firm, while RIL is trading weak. As per a leading business daily, Petroleum and Natural Gas Regulatory Board (PNGRB) had invited bids for setting up city gas projects for retailing CNG to automobiles and piped natural gas to households in six cities last year. Eight companies including RIL, GAIL and IOC have shown interest in this project. The final financial bid would be submitted in the next 10 days. The successful bidders would start supplying the gas within 3 months. In the next phase, PNGRB would also cover the supply of gas in 14 cities. Being a high margin business, these companies have shown keen interest in the CNG segment. However, procurement would be an issue as it has low priority on the gas utilization policy.

Cement stocks are trading firm led by Ambuja Cements and ACC. As per a leading business daily, cement manufacturers have increased cement prices by Rs 6 to Rs 10 per 50 kg bag last fortnight. The prices have also been hiked for wholesale segment, despite lowering excise duty on bulk cement prices. The demand supply mismatch is mainly on account of lower production by the companies. The same is short term phenomenon. The industry has lined up huge capacity expansion plans. The fresh capacities announced till date will add up 60 MT to the existing capacity (200 MT), and are expected to go on stream by FY10. As the capacities become operational, supply is expected to outstrip demand putting downward pressure on margins.

Metals shine amidst despair

The Indian markets have started the day’s proceeding on a volatile note. While stocks from the metal and realty sectors are leading the pack of gainers, stocks from the energy and software sectors are trading weak. The overall market breadth is negative with losers outnumbering gainers by a ratio of almost 1.1 to 1 on the BSE. As regards global markets, both the US and the European markets ended in the red yesterday. The Asian markets are currently trading mixed.

The BSE Sensex and NSE Nifty are trading lower, down by 25 points and 5 points respectively. The BSE Midcap and Smallcap indices are currently trading flat. The rupee is trading at 51.99 to the dollar.

Voltas, through its textile machinery division, has entered into a alliance with Thies of Germany for the purpose of selling and servicing Thies products in India. The Thies product range includes fabric dyeing machines, jiggers, fully automated yarn dyeing machines etc. As per the company, the alliance will seek to address the weaving and processing segment of the textile industry. It may be noted that Voltas already has a similar alliance with Lakshmi Machine Works (LMW) of India to cater to the spinning machinery segment. Interestingly, this comes at a time when the textile sector is facing a drastic drop in demand due the global slowdown. The stock of Voltas is currently trading higher.

As per a leading business daily, Yes Bank has raised Rs 1.5 bn of Tier-I capital through private placement of perpetual bonds. The bank has raised Rs 7 bn in FY09 partly by way of Tier I and partly by way of Tier II capital. It may be noted that Yes Bank had earlier planned an equity dilution in FY09 which was later shelved due to low valuations. The bank reported a capital adequacy ratio of 14.6% at the end of 3QFY09 and the additional capital raised makes it adequately capitalised for the medium term. However, it needs to keep a watch on its net interest margins (NIMs) which have been under pressure in recent quarters. The stock of Yes Bank is currently trading flat.