Closing Bell 23-03-09

Closing Bell 23-03-09

The Indian markets continued their northward journey on account of sustained buying activity during the previous two hours of trade. Almost all stocks on the Nifty are trading in the green, except DLF which is currently trading lower. The overall advance to decline ratio is poised at 2 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by almost 330 points and 100 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 1.8% and 1.4% respectively. The rupee is trading at 50.52 to the dollar.

Realty stocks are trading mixed. While, DLF and Phoenix Mill are trading lower, HCC and Unitech are trading higher. As per a leading business daily, DLF plans to acquire DLF Asset (DAL), a real estate investment trust owned by DLF’s promoters for an enterprise value of around Rs 70 bn. This move is aimed at bringing commercial properties from DAL under DLF and repaying some of the debt on DAL’s balance sheet. It may be noted that DAL had acquired four SEZs (Special Economic Zones) from DLF. They currently have a built up area of around 4.5 m sq. feet and are expected to go up to 19 m sq feet upon their completion. DAL currently earns Rs 3.25 bn per annum from lease rentals from these SEZs and is expected to earn around Rs 6 annually from FY10 onwards. As per the deal, DLF will raise a debt of around Rs 25 bn by mortgaging the receivables from these lease rentals and will pay back some of DAL’s debt.

Pharma stocks are trading mixed. While Ranbaxy and Sun Pharma are trading higher, GSK Pharma is trading lower. Ranbaxy has announced that its Paonta Sahib manufacturing facility in India has received Good Manufacturing Practice (GMP) certificate from the drug regulatory body of UK and Australia. The UK approval would apply to the entire European Union. This would help Ranbaxy to market drugs from this facility in these countries. It must be noted that the production of drugs from this plant has been halted by the US FDA after it had found manufacturing deficiencies. Thus, while the green signal from UK and Australia is a positive for the company, the US FDA has yet to submit the compliance report for the same manufacturing plant.

The indices gained further ground during the previous two trading hours on account of sustained buying activity across the index heavyweights. Stocks from the metals, oil & gas and power sectors are leading the pack of gainers, while select realty stocks are trading weak. The overall advance to decline ratio is poised at 2 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by 270 points and 90 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 1.5% each. The rupee is trading at 50.52 to the dollar.

Power stocks are trading firm led by Tata Power and NTPC. As per a leading business daily, NTPC’s plan to acquire an equity stake in an Indonesian coal mine has met with a roadblock. Sugico Graha, the company in which the stake was proposed to be acquired, has now expressed its inability to offer the stake to NTPC. However, the Indonesian company now wants to enter into a coal supply agreement instead. This development may affect NTPC adversely in the long run on account of coal supply. NTPC has been facing coal shortages and needs additional coal supply to meet its aggressive expansion plans. It may be noted that the company had outlined an expansion plan of 22,400 MW during the eleventh five year plan.

Aluminium stocks are also trading firm led by Hindalco and Nalco. As per a leading business daily, Nalco is planning to cut down its production in order to keep up with the falling demand and reduce its inventory level. The company currently has higher inventory level of around 20,000 tonnes as against its usual inventory level of 5,000 tonnes. The company plans to cut production if its inventory level crosses 30,000 tonnes mark. Also the LME (London Metal Exchange) prices of aluminium have declined by more than 65% during the last three quarters. Furthermore the inventory levels at LME have reached an all time high of 3.5 m tonnes. This has forced most of the aluminium companies to cut down on their productions. Nalco’s production cut is likely to impact its margins as the company would continue to incur higher fixed costs.

The Indian markets started the day’s proceedings on a firm note. While stocks from the metal, power and energy sectors are leading the pack of gainers, stocks from the realty and consumer durable sectors are the worst hit. The overall market breadth is positive with gainers outnumbering losers by a ratio of almost 3 to 1 on the BSE. As regards global markets, while European markets ended in the green, the US markets ended in the red last Friday. Asian markets are currently trading firm.

The BSE Sensex and NSE Nifty are trading higher, up by 179 points and 58 points respectively. The BSE Midcap and Smallcap indices are trading higher, up by 1.25% and 1.17% respectively. The rupee is trading at 50.53 to the dollar.

Cement stocks are currently trading mixed. While Prism Cement, Mysore Cement and ACC are garnering investors’ interest, JK Lakshmi Cement and Mangalam Cement are at the receiving end. In the wake of the ongoing financial crisis and economic slowdown, India’s largest cement manufacturer ACC, has decided to stall the expansion plans of its ready-mix concrete (RMX) business. Earlier the company had announced that it would invest Rs 6 bn to set up 150 RMX plants by 2011. The company will now focus on its existing businesses. It may be noted that ACC transferred its RMX business to a wholly-owned subsidiary, ACC Concrete, in January 2008 to increase its focus on the business. Ironically, this decision has come at a time when demand for cement has started picking up and dispatches have improved since last quarter. However, in the current uncertain environment this move will likely help the company weather the economic slowdown.

Automobile stocks are currently trading firm led by Tata Motors, M&M and Bajaj Auto. Today Tata Motors will launch its most awaited car, Nano. The Nano would come in three variants -- standard and two deluxe models with air conditioning. After the launch the car would be displayed at the company's dealerships from the first week of April 2009. The booking process and other details of this car would be announced after its launch. As per the company the car would meet Bharat Stage-III emission norms and could also meet the stringent Euro 4 norms. The car has also gone through a full frontal crash test as per standard norms. The idea of making this car was conceived in 2003 by Ratan Tata which went through many controversies, hurdles and criticism. The launch of Nano would open the door for new low budget cars which would change the landscape of the automobile industry in India.