Friday, May 8, 2009

Closing bell 08-05-09

Closing bell 08-05-09

Indian indices that began the day's proceeding above the dotted line have ended the day deep in the red. Soon after opening on a positive note, indices moved into the negative territory on account of selling activity witnessed at higher levels. As the day progressed, persistent selling activity led to further weakening of the market sentiments. The BSE-Sensex closed with losses of around 240 points, while the NSE-Nifty closed lower by about 60 points. Stocks from the mid-cap index ended the day on a weak note as well, while stocks from small-cap space closed in the green. Stocks from the software, banking and metals sectors led the pack of losers.

Other Asian markets ended the day on a mixed note. The European indices are currently trading firm. Rupee was trading at 49.42 against the US dollar at the time of writing.

As per a leading business daily, Petronet LNG had signed an agreement to buy 1.5 m tonnes a year of liquefied natural gas (LNG) for its terminal in Kochi in southern India. The deal is with US energy major Exxon Mobil's subsidiaries - Australia Resources and Mobil Exploration & Producing Australia. The deal comes just a week after the Australian regulator approved the expansion of the Gorgon project to 15 m tonnes per year. Exxon owns 25% of the project. This is a positive development for the Petronet LNG as it has been in search of additional cargoes apart from the supplies it receives from Qatar. The stock ended the day's session on a frim note.

As per a leading business daily, IT major, Wipro expects IT demand to start picking up from the second half of FY10. The company expects most of the price cut negotiations to end by June this year. It may be noted that IT sector has been one of the biggest casualties of the financial crisis that started in the US. In fact, the US is a major revenue source for Indian IT industry. Rupee depreciation against the US dollar has further added to the industry's woes. Although Wipro's results did beat estimates, the company expects June quarter to remain subdued. Software stocks ended weak led by Wipro and Infosys.

Inflation, as measured by the WPI, ended at 0.7% for the week ended April 25. This is higher than last week's number of 0.57%. The same has edged up for the third consecutive week mainly on account of food items and manufactured products. In the corresponding period in the previous year, the inflation stood at 8.27%.

Metals, banking lead the fall

The Indian markets continued their southward journey on account of sustained selling activity witnessed during the previous two hours of trade. Currently, stocks from the metals, software and banking sectors are leading the pack of losers, while select stocks from the FMCG and power sectors are trading firm. The overall decline to advance ratio is poised at 1.3 to 1 on the BSE.

The BSE Sensex and NSE Nifty are trading weak, down by around 300 points and 80 points respectively. The BSE Midcap and Smallcap indices are trading lower by around 1.1% and 0.6% respectively. The rupee is trading at 49.33 to the dollar.

Steel stocks are trading lower led by Tata Steel, SAIL and JSW Steel. As per a leading business daily, Tata Steel's sales volume grew by 31% YoY to 452,000 m tonnes in April 2009 at its Indian operations. This was mainly on account of a rise in sales of long products by 39% YoY and flat products by 27% YoY. The company also increased the prices of long products by around Rs 500 per tonnes on the back of firm demand from the rural and semi urban areas. It may be noted that Indian operations account for around 25% of the company's total steel production capacity, while they contributed to around 40% of consolidated bottomline during 9mFY09.

Real Estate stocks are trading mixed. While DLF and HCC trading lower,D S Kulkarni and Parsvnath Developers are trading higher. As per a leading business daily, DLF will have to pay additional tax of Rs 3 bn to Rs 4 bn for FY06, after the Income Tax department found that it had lowered its income by around Rs 12 bn for that year. However, the company plans to file an appeal against the government order. It may be noted that accounting norms for construction and real estate development companies had changed in FY06, wherein they had to start using the percentage of completion method for recognising revenues and profits. In December 2008, the Income Tax department had ordered a special audit to evaluate the tax filings of DLF for FY06, which recommended that approximately Rs 12 bn be treated as additional income. This additional tax is likely to put further strain on the company's cash flows at a time when it is already dealing with a slump in the real estate sector.

Sun Pharma gets USFDA nod

The Indian indices lost ground during the previous two hours of trade on the back of selling activity witnessed among the index heavyweights. Stocks from the metals, banking and software sectors are leading the pack of losers, while select energy and FMCG stocks are trading firm. The overall advances to decline ratio is poised at 1.3 to 1 on the BSE.

The BSE Sensex and NSE Nifty are trading weak, down by around 110 points and 40 points respectively. However, the BSE Midcap and Smallcap indices are trading higher, up by around 0.2% and 0.9% respectively. The rupee is trading at 49.24 to the dollar.

Pharma stocks are trading mixed. While Ranbaxy and Sun Pharma are trading firm, Glenmark Pharma is in the red. Sun Pharma has received a tentative approval for its Abbreviated New Drug Application (ANDA) from the US Food and Drug Administration. The company has received a tentative approval for its ‘Alfuzosin' hydrochloride tablets, which is a generic version of Sanofi-Aventis' ‘Uroxatral' extended release used to treat enlarged prostate condition. The company has received the approval for marketing the drug in 10 mg tablets. ‘Alfuzosin' hydrochloride tablets have annual sales of around US$ 180 m in the US. Now, the company will await the final approval for marketing the drug in the US. This is a positive development for Sun Pharma as it will help the company increase its revenue share in the highly competitive US market.

As per a leading business daily, Tata Motors plans to raise Rs 50 bn with the help of a bond issue to refinance its bridge loan of US$ 2 bn, which it took to acquire Jaguar and Land Rover. The bonds will mature in two to seven years. The funds would have to be raised during this month as Tata Motors has to repay the loans on June 1. Besides the bonds issue, the remaining loans are expected to be financed by way of term loans. It be noted that the company had earlier planned to raise funds through equity issue and sale of more investments, which did not materialise on account of adverse market conditions. The stocks of Tata Motors along with Maruti Suzuki are trading weak on the bourses currently.

ONGC's exit plans, stock up

The Indian markets have started the day's proceedings on a subdued note. While stocks from the energy, pharma, engineering and steel sectors are trading firm, select stocks from the banking and auto sectors are among the losers. The overall market breadth is positive with gainers outnumbering losers by a ratio of almost 1.7 to 1 on the NSE. As regards global markets, the US markets ended in the red yesterday. The European markets ended mixed, while the Asian markets are currently trading lower.

The BSE Sensex and NSE Nifty are trading higher, up by 15 points and 6 points respectively. The BSE Midcap and Smallcap indices are currently trading flat. The rupee is trading at 49.31 to the dollar.

Oil and Natural Gas Corporation (ONGC) is planning to exit Cairn India's Rajasthan oilfields. The company finds the project economically unviable due to government levies. As per licence conditions for the Rajasthan block, ONGC has the right to take 30% in any discovery without any cost. However, it also has to pay the entire royalty. The royalty to be paid by the company is more than the value of the 30% production it will receive from the fields, thus making it unviable. Cairn is ready to start production from these fields by this month end and is slated to reach a peak of 175,000 barrels of oil per day (bopd) by 2011. The stock, along with Cairn, is trading firm.

As per a leading business daily ICICI Bank is planning to open nearly 580 branches during the current fiscal. This will take the total number of branches to nearly 2,000 by next fiscal. The company however might not increase the headcount, currently at about 36,000 to manage the new branches and would deploy the existing employees. The management is also looking at improving net interest margin, controlling costs and credit quality. It expects profits in the current fiscal to be higher than in FY09. Under the impact of the adverse economic conditions, ICICI Bank's net profits fell by 10% during FY09. ICICI Bank, along with its private sector peers HDFC Bank and Axis Bank, is trading in the red.

Compiled and Brought to you by 

Equity Research Team

Intelligent Investor -
Invest Advisory Arm of

Ravina Consulting
Bangalore India

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