Tuesday, May 26, 2009

Closing Bell 26th May 2009

Closing Bell 26th May 2009

Persistent selling activity led the markets to lose further ground during the final hour of trade. However, the indices did stage a minor comeback during the fag end. The BSE-Sensex ended the day on a weak note, down by around 320 points, while the NSE-Nifty closed lower by about 130 points. Stocks from the mid-cap and small-cap space ended the day on a lower note as well, recording losses of 3.2% and 2.8% respectively. Stocks from the realty, capital goods and power sectors led the pack of losers today, while the IT space managed to garner the investors’ interests.

Other Asian markets ended the day on a weak note. The European indices are currently trading lower as well. Rupee was trading at 47.82 against the US dollar at the time of writing.

Pharma stocks ended the day on a weak note led by Ranbaxy, Biocon and Wockhardt. Dishman Pharma announced its results yesterday. The company’s revenues grew by 33% YoY during the year. This growth was led by both its business segments - CRAMS and Marketable molecules (MM). Further, its operating margins expanded by 5.7% on account of lower raw material prices (as percentage of sales). During FY09, the company’s EBIDTA margin stood at 24.9%. Profitability wise, Dishman recorded a 21% YoY growth during the year. It may be noted that during FY08, the company had an extraordinary income gain of Rs 379 m. On excluding the same, growth in net profits stood at a strong 75% YoY during FY09.

Two-wheeler stocks ended the day on a mixed note led by Bajaj Auto and TVS Motors. However, Hero Honda did manage to close on a firm note. As per a leading business daily, Bajaj Auto has planned to take full benefit of its alliance with Austrian power bike maker, KTM Power Sports, which it had acquired about two and half years back. The company plans to jointly manufacture complex and power engine bikes. In addition, both the companies will utilise their distribution network to market the bikes in India as well as abroad. It may be noted that Bajaj Auto is aiming to become the leader in the premium bike segment in India. It currently has only one model in the 200 cc plus segment while KTM has several offerings in the premium end bike segment.

Virgin Atlantic, a 51:49 partnership between Richard Branson and Singapore Airlines posted its results recently. The company’s profits for the year almost doubled as compared to the previous year. The management attributed rising demand for premium travel to be the reason for this strong performance. As per the company, pre-tax profits were higher by 97% YoY to 68 m pounds for the year ending February as against 35 m pounds in the previous year. It is an outstanding performance considering companies such as British Airways have recorded huge annual losses.

The Indian markets continued with their southward journey on account of sustained selling activity witnessed during the previous two hours of trade. Stocks from the pharma, power and telecom sectors are currently leading the pack of losers, while select stocks from the software, metal and auto sectors are trading firm. The overall advance to decline ratio is poised at 1.2 to 1 on the BSE.

The BSE-Sensex and the NSE-Nifty are trading lower, down by around 225 points and 100 points respectively. The BSE-Midcap and BSE-Smallcap indices are trading weak, down by around 2.2% and 1.8% respectively. The rupee is trading at 47.73 to the dollar.

Power stocks are trading mixed. While GVK Power and Torrent Power are trading higher, NTPC and Tata Power are trading lower. As per a leading business daily, India's largest power company NTPC has planned to spend 245 bn as capital expenditure during the current fiscal (FY10) as against Rs 151 bn spent in FY09. The company will invest around Rs 177 bn on a standalone basis, while Rs 68 bn will be invested through joint ventures and subsidiaries. It may be noted that NTPC plans to add around 3,300 MW of new generation capacity during this fiscal. It also plans to develop its captive coal mine in Jharkhand. The company is also trying to take up the renovation and maintenance of a power plant in Kazakhstan and is keen to operate 4,000 MW plant in the same region.

Banking stocks are trading mixed. While PNB and Bank of India are trading higher, SBI and IDBI Bank are trading lower. As per a leading business daily, PNB is mulling over acquiring a bank in Africa of a size of up to US$ 30 m. It may be noted that PNB does not have a significance presence in the overseas markets as compared to its peers. It currently has offices in 8 countries and has received approval from RBI to set up subsidiary in Canada, an offshore banking unit in Singapore and a branch in Dubai. The management plans to expand its presence in the overseas through acquisitions rather than setting up branches as the entry cost is high and the entire process is time consuming.

The Indian markets continued to trade in the negative territory during the previous two hours of trade as selling pressure sustained among the index heavyweights. Currently, stocks from the software and engineering sectors are trading firm, while select stocks from the telecom and power sectors are at the receiving end. The overall advance to decline ratio is poised at 2.8 to 1 on the BSE.

The BSE-Sensex and the NSE-Nifty are trading lower, down by around 30 points and 25 points respectively. However, the BSE-Midcap is trading flat and the BSE-Smallcap is trading higher by around 1.3%. The rupee is trading at 47.62 to the dollar.

As per a leading business daily, Ranbaxy may face a potential revenue loss of US$ 40 m to US$ 50 m on account of delay in supplying a key ingredient to UK based AstraZeneca for the manufacture of the latter’s anti-ulcer drug, ‘Nexium’. The delay in supply was on account of the ban imposed by US FDA on two of Ranbaxy’s plants, which prompted AstraZeneca to inspect the company’s plant at Punjab where the API for ‘Nexium’ is made. The company is also scheduled to start formulating a significant portion of ‘Nexium’ from May 2010. It must be noted that ‘Nexium’ is the world’s second largest selling drug with annual sales of US$ 5.5 bn. The stock of Ranbaxy is currently trading weak on the bourses.

Software stocks are trading firm led by Infosys, Wipro and TCS. As per a leading business daily, IT companies would gain from the outsourcing contracts expected from CitiGroup, which is believed to undergo a major cost control IT exercise to integrate its system. This initiative will bring new business contracts for the Indian IT vendors. TCS had earlier acquired CitiGroup’s back-office business and the latter is among the top clients of the company along with Wipro.

While the Indian markets began the day’s proceedings on a positive note, a shaky start subsequently led the indices to move towards the dotted line. While consumer durables and metal stocks are trading higher, auto and energy stocks are among the losers. The overall advance to decline ratio is poised at 6.3 to 1 on the BSE. As regards global markets, while US markets remained closed yesterday, the European markets ended the day on a mixed note. The Asian indices are currently trading mixed.

As per a leading business daily, Tata Motors is expected to roll over (sign new contracts with lenders) close to about US$ 1 bn of debt that is remaining out of the US$ 3 bn bridge loan it had taken in 2008 to fund the acquisition of Jaguar and Land Rover. The new contracts formed with the banks are likely to specify that Tata Motors repay the debt in four installments over an 18 month period at an interest of around 5% over the LIBOR (London interbank offered rate) which is currently 1.2%. This will provide the company headroom for paying back the loan by internal cash generation over the span of the above mentioned timeframe.

As per a leading business daily, HCL Infosystems has bagged an order worth Rs 2.4 bn from state-run telecom major Bharat Sanchar Nigam Ltd (BSNL) to implement a system integration project. The project will comprise over 60,000 enterprise resource planning (ERP) licences and will attempt to help BSNL improve its information flow, cycle time, financial performance and information transparency and thus to manage and coordinate all its resources, information, and functions of its business from shared data stores. The stock of HCL Infosystems is currently trading higher.