Friday, March 27, 2009

Closing Bell 27-03-09

Closing Bell 27-03-09

The Indian markets witnessed a choppy trading session today as alternate bouts of buying and selling activity led the indices to move around in a volatile manner. However, during the final hour of trade, persistent buying activity led the Indian markets to rise above the dotted line and end the day with marginal gains. The BSE-Sensex closed higher by around 45 points, while the NSE-Nifty closed higher by about 25 points. Stocks from the mid-cap and small-cap space ended the day in the green as well. Buying activity was witnessed in stocks across sectors led by the stocks from the metals and healthcare space. However, stocks from the software and energy sector bore the brunt of profit booking.

Most other Asian markets closed on a mixed note. The European indices are currently trading mixed as well. Rupee was trading at 50.22 against the US dollar at the time of writing.

PSU power equipment maker BHEL has bagged a Rs 3.5 bn contract from Nuclear Power Corporation (NPCIL) to manufacture four steam generators for the latter’s power project in Gujarat. This is the company’s first-ever order for manufacturing 700MWe (megawatt electric) nuclear steam generators. It may be noted that till date, BHEL has designed, installed and commissioned nearly 80% of NPCIL’s 4,120 MW installed capacity. Nuclear power equipment segment contributes marginally to BHEL’s overall revenues and the company is looking at strengthening its presence going forward.

Power stocks ended the day on a mixed note. While Torrent Power and GIPCL ended firm, Reliance Infrastructure ended in the red. As per a leading business daily, Reliance Infrastructure is likely to foray into the IT vertical to implement automation systems for state-owned distribution utilities. It is believed that the company has been shortlisted by Power Finance Corporation to provide such IT implementation services. The company has been shortlisted in different roles like system integrator, meter reading provider, GIS and network service provider for state electricity boards (SEBs). This is a positive development for Reliance Infrastructure as it will help it move into a new business vertical. It may be noted that SEBs have lined up investments to the tune of Rs 100 bn to implement IT automation systems in order to reduce their aggregate technical and commercial losses.

As per a leading business daily, public sector oil companies have drawn out a plan to spend nearly Rs 570 bn in FY10 to expand supplies and build new transportation networks for oil and gas. It is believed that the government will contribute a marginal amount of Rs 250 m to these investments. As such, the balance will be invested by nearly thirteen PSU oil companies. This is a positive development for companies whose business is largely dependent on investments made by the oil and gas sector. On the back of this news, stocks of Punj Lloyd, Welspun Gujarat and KSB Pumps ended the day on a strong note.

The Indian markets stayed volatile during the previous two hours of trade on the back of alternate bouts of buying and selling activity. Stocks from the metals, pharma and auto sectors are leading the pack of gainers. However, select stocks from the software and power sectors are trading weak. 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 lower, down by 70 points and 10 points respectively. However, the BSE-Midcap and BSE-Smallcap indices are trading higher, up by 1.4% and 0.9% respectively. The rupee is trading at 50.54 to the dollar.

Steel stocks are trading higher led by Tata Steel and SAIL. As per a leading business daily, Tata Steel is likely to roll-back a part of its production cut at its UK subsidiary, Corus. It may be noted that the company had cut the output at Corus by as much as 40% on account of a slowdown in the global economy. The global demand for steel, still remains a concern, but the company believes that there have been some sign of revival in demand in the European markets. The production cut had resulted in a 24% YoY dip in volumes in 3QFY09.

Software stocks are trading mixed. While Tech Mahindra is trading firm, Infosys and TCS are trading weak. As per a leading business daily, Infosys plans to explore acquisition opportunities in the US. The company’s management believes that there will definitely be opportunities in the US, that too at reasonable valuations. In addition they believe that candidates from the healthcare and pharmaceuticals verticals would be ideal targets. It may be noted that company has a cash of around US$ 2 bn on its book and has no debt. This move will help Infosys strengthen its presence in these segments.

The markets slipped into the negative territory during the previous two hours of trade on account of profit booking at higher levels. Stocks from the banking and metals sectors are leading the pack of gainers, while select stocks from the FMCG, energy and software sectors are at the receiving end. The overall market breadth is positive with gainers outnumbering losers by a ratio of 1.9 to 1 on the NSE.

The BSE Sensex and the NSE Nifty are trading lower, down by around 60 points and 9 points respectively. The BSE Midcap and Smallcap indices are however trading higher, each up by 1%. The rupee is trading at 50.48 to the dollar.

As per a leading business daily, Lupin has completed the acquisition of majority stake in Multicare Pharmaceuticals Philippines Inc. (Multicare) However, the company has not divulged the extent of its equity participation. Multicare is a branded generic company, focusing on the woman and child health segment. Multicare reported revenues of 272 m Philippine peso (US$ 5.6 m or Rs 28 m) in 2008. The Philippines market is estimated at US$ 2.5 bn, which is currently dominated by multinational drug manufacturers. Apart from expanding reach and entry into the Philippines market, the acquisition offers access to established brands and supply chain in Philippines. While Lupin is trading lower, Cadila Healthcare and Ranbaxy are trading firm.

Oil major, ONGC has deferred its investment plans in Imperial Energy. The company is planning to consolidate the western Siberian operations rather than raise crude oil production currently. ONGC Videsh (OVL),the foreign arm of ONGC was to invest about US$ 1.5 bn in raising output to 35,000 barrels per day (currently around 10,000 bpd) by the year end in Imperial Energy. However, the drop in crude oil prices since the time OVL had made the bid for Imperial in August 2008, has led to the change in the capital expenditure plans. It may be noted that Imperial’s assets are in Tomsk region of West Siberia, which is one of the world's most prolific hydrocarbon basins. Hence, the acquisition holds a large potential upside for ONCG which going forward. ONCG is trading firm, while Reliance is the negative zone.

The Indian indices began on a volatile note. While buying activity is being witnessed in stocks from the capital goods, banking and commodity space, stocks from the IT sector are at the receiving end. The overall advance to decline ratio is poised at 2.3 to 1 on the BSE. Yesterday, the US markets 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 70 points and 25 points respectively. The BSE Midcap and Smallcap indices are trading higher by 1.7% and 1% respectively. The rupee is trading at 50.46 to the dollar.

As per a leading business daily, Tata Tea and European Bank for Reconstruction and Development (EBRD) will together acquire 51% in Russian firm ‘Grand’. After the acquisition, while Tata Tea will hold 33.2% stake, EBRD will hold 17.8%. The acquisition would be completed during the first half of 2009. It may be noted that Grand is a Russian branding, packaging and distribution company and a well known player in coffee and tea sector in Russia. This acquisition will help Tata Tea strengthen its presence in Russian beverages market. The move is in line with the company’s long term strategy as acquisitions are likely to be important growth drivers as it will aid the company to market itself more as an FMCG company rather than a plantation company. Tata Tea is currently trading higher.

As per a leading business daily, some of the country’s largest steelmakers are now operating at full capacity. This comes on the back of a five month down period that saw them cutting production. Last October most steel companies were forced to cut output by up to 40% due to a sharp fall in demand for steel. However, companies including SAIL and Tata Steel have all resumed normal production now. A part of the reason for this may be an improvement in the economic situation since January on account of fiscal and monetary measures taken by the government and RBI. It may be noted that Tata Steel recorded a 47% YoY jump in sales in February, with long products registering a 65% YoY increase. Steel stocks are trading higher on the bourses currently with Tata Steel and SAIL both witnessing healthy gains.