Thursday, March 26, 2009

Closing Bell 26-03-09

Closing Bell 26-03-09

Sensex breaches the 10,000 mark
The Indian markets had another field day today as buying activity spurred the Sensex to cross the psychological 10,000 mark. However, the final hour of trade saw the markets give up a part of their gains on account of profit booking. The BSE-Sensex closed with gains of around 335 points, while the NSE-Nifty closed higher by about 100 points. Stocks from the mid-cap and small-cap space ended the day in the green as well. Barring realty sector, buying activity was witnessed in stocks across the board led by the stocks from the capital goods and metals space.

Most other Asian markets closed on a mixed note. The European indices are currently trading mixed as well. Rupee was trading at 50.55 against the US dollar at the time of writing.

Inflation for the week ending March 14 dropped to 0.27% from 0.44% recorded a week earlier. While the general consensus may be that it would give room to the RBI to take further monetary steps, it may be noted that prices of some commodities like cereals and vegetables rose during the week. It is believed that the latest inflation number is the lowest recorded in nearly 33 years.

Software stocks ended the day on a mixed note with Mphasis and TCS leading the pack of gainers and NIIT and HCL Tech closing in the red. As per a leading business daily, HCL Tech has entered into a three year contract with MJ Logistic Services, a logistics service provider managing over 1 m square feet of warehousing space. As per the contract the IT firm will provide integrated applications and infrastructure services along with complete automation of warehouse management processes. However, the size of the deal has not yet been mentioned. It may be noted that during 2QFY09, the infrastructure services segment contributed to nearly 16.5% of the company’s revenues.

Auto stocks ended the day on a firm note led by Tata Motors, Eicher Motors and TVS Motors. As per a leading business daily, the management of Maruti Suzuki has made a statement wherein it believes that the Nano will impact the sales of its small car, the Maruti 800. The management may have made these statements keeping in mind that the most expensive model of the Nano is cheaper than the base model of the Maruti 800. Also, with the fact that the Nano has created a huge craze, bookings for Maruti 800s may be lower in the short term. However, the management added that the company has no intention to lower the vehicle’s price. It may be noted that the Maruti 800 had a share of nearly 6% to 7% of the total car sales in the year till date.

The markets continued their northward journey on account of sustained buying activity witnessed during the previous two hours of trade. Stocks from the engineering, software and auto sectors are leading the pack of gainers while select stocks from the power, energy and pharma sectors are trading lower. The overall advance to decline ratio is poised at 1.4 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by 230 points and 50 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 1% each. The rupee is trading at 50.63 to the dollar.

Software stocks are trading firm led by TCS, Satyam and Infosys. As per a leading business daily, India’s largest IT company TCS expects its microfinance solutions to contribute around Rs 4 bn by FY10 onwards which is about 20% of the total revenues from BFSI segment in India. TCS earns around US$ 1 bn annually from its Indian operations, to which BFSI segment contributes nearly 40%. As per the management, TCS will provide payment platforms and solutions through a managed service model wherein it will facilitate all the necessary software and hardware to clients and charge fees on pay per user basis. It may be noted that microfinance is a means to provide financial services to low income groups. The unbanked population in India is nearly 70% and banks are gradually looking to extend services to them. This provides a huge opportunity in this segment.

Steel stocks are trading firm led by JSW Steel, Tata Steel and SAIL. As per a leading business daily, BHP Billiton, world’s largest miner is believed to have negotiated the new prices for coking coal in the range of around US$ 115 to US$ 129 fob (free on board) per tonne with Japanese steel producers recently. As per the report, these prices are lower by around 60% on a YoY basis. It may be noted that the prices entered into by Japanese steel firms are considered as a benchmark for the steel companies globally. Japanese steel mills are planning a production cut of around 20% in 2009. This means that Japan will require around 12 m tonnes less coking coal in 2009. Hence globally the prices of coking coal are likely to soften furthermore. This is likely to have positive impact on the domestic steel industry as most of the companies enter into annual contracts during the month of July, by when the prices would have come down significantly.

The markets continued to trade in the green during the previous two hours of trade due to sustained buying activity. Stocks from the engineering, auto and banking sectors are trading higher, while select power and pharma stocks are trading weak. The overall advance to decline ratio is poised at 1.5 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by 180 points and 40 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 1% each. The rupee is trading at 50.53 to the dollar.

Pharma stocks are trading mixed. While Dishman Pharma and Glenmark Pharma are trading higher, Ranbaxy is trading lower. Dishman Pharma has signed an agreement of co-operation and joint API development with Polpharma SA, based in Poland. Polpharma is a leader in the markets of Central and Eastern European (CEE) and CIS countries with revenues of CAD$ 400 m. The firm is also a leader in active pharma ingredient (API) sales with almost 90% sales of which is from regulated markets including the US. This move by Dishman is to strengthen its custom manufacturing business. Also, given that the regulatory requirements have become stricter, building partnerships will be the key to sustain growth in various markets.

FMCG stocks are trading mixed. While Marico is trading higher, Dabur is in the red. As per a leading business daily, Marico plans to reposition its foreign brands that it had acquired in the past few years. It may be noted that the company now has a presence in Bangladesh, West Asia, South Africa and Egyptian markets. As penetration level is very low in these emerging markets, the company expects higher growth coming from the regions in the future. The international business group, which handles Marico’s foreign operations, contributed 18% to the company’s total revenues during FY08 and has been growing at 40% during the past three years. This move will strengthen the company’s presence in these markets.

The Indian indices began the day well above the dotted line. Buying activity is being witnessed in stocks from the capital goods, power and metals space. The overall advance to decline ratio is poised at 2.3 to 1 on the BSE. Yesterday, the US markets too ended on a positive note, while the European markets closed mixed. The Asian indices are currently trading mixed as well.

The BSE Sensex and the NSE Nifty are trading higher, up by around 120 points and 40 points respectively. The BSE Midcap and Smallcap indices are trading higher by 1% each. The rupee is trading at 50.64 to the dollar.

Pharma stocks have begun the day on a positive note. As per a leading business daily, Ranbaxy has received the Australian drug regulator’s approval to sell its generic version of drugmaker Janssen-Cilag’s anti-schizophrenia drug ‘Risperdal’. This approval is basically for the registration of its ‘Ozidal Risperidone’ tablets in Australia. It may be noted that with the approval of ‘Ozidal’, Ranbaxy will now have 27 molecules approved for marketing in Australia. This range covers several therapeutic areas including anti-hypertensives, anti-infectives, hypolipidaemic agents, anti-convulsants and anti-depressants. This is a positive for the company and comes on back of the Australian authorities giving a clean chit to Ranbaxy’s Paonta Sahib facility in Himamchal Pradesh. Ranbaxy is currently trading higher on the bourses.

As per a leading business daily, GAIL will spin off its marketing business into a separate firm from April 1, 2009. This move would be for the purpose of complying with the policy guidelines outlined by the Petroleum and Natural Gas Regulatory Board. While GAIL India will remain a gas transmission company and will continue with its business of constructing inter-country pipelines to transport gas, GAIL Gas (GGL), the business to be spun off, will carry out the marketing business. It may be noted that internally the company has already separated the accounts for its transportation and marketing businesses, but the two entities will be legally separated only from the next financial year. Also, GGL will be listed on the exchanges soon. All allied businesses such as petrochemicals and telecom will remain under GAIL India. GGL will also focus on the city gas distribution space. The stock of GAIL is currently trading marginally lower.