Closing Bell 31 March 2009

Closing Bell 31-03-09

Metals & realty leads the surge

The markets continued to trade higher in the positive territory on account of sustained buying activity witnessed during the previous two hours of trade. While stocks from the realty, metals and auto sectors are leading the pack of gainers, select stocks from the banking and energy sectors are trading weak. The overall advance to decline ratio is poised at 1.8 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by 160 points and 50 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 2% and 1.2% respectively. The rupee is trading at 50.82 to the dollar.

Pharma stocks are trading mixed. While Glenmark Pharma is trading lower, Dr. Reddy and Ranbaxy are trading higher. As per the BSE announcement, Cadila Healthcare has received an approval from the US FDA for a generic drug ‘Topamax’ (topiramate tablets) used in the treatment of partial onset seizures. The company will be able to market topiramate tablets in the strengths of 25 mg, 50 mg, 100 mg and 200 mg in the US markets. The company currently has around 42 approved drugs and 83 ANDA filed with the US FDA. It may be noted that topamax tablets have an annual sales of around US$ 2.5 bn in the US market. This is a positive development for the company as it will help the company to boost its revenue from the highly competitive US market. The region contributes 11% to the total sales.

Power stocks are trading firm led by Reliance Infra, Tata Power and NTPC. As per a leading business daily, Tata Power has commercialized additional 250 MW of capacity to its Trombay Thermal power station. This additional capacity will operate on imported Indonesian coal and will enhance the generation capacity of the Trombay plant to 1,600 MW from the current 1,350 MW capacity. It may be noted that the company has invested around Rs 11 bn for this project, which was started few years back as part of company’s plans to add 5500 MW capacity. Mumbai contributes around 85% of the company's power supply business revenues and this project would supply the additional power requirement in the Mumbai region. It also plans to add around 73 MW of wind power generation capacity at an investment of around Rs 6 bn, which is would be commissioned by April 2009. In another development, the company’s strategic electronics division (SED) has bagged an order to the tune of around Rs 1.8 bn from Bharat Electronics to manufacture ‘16 Akash Launchers’ for India's defence forces. This order has to be delivered in 33 months.

Though still in the positive territory, the Indian markets lost some ground during the previous two hours of trade. Realty, metals and engineering stocks are leading the pack of gainers. However, select stocks from the banking and FMCG sectors are trading weak. The overall advance to decline ratio is poised at 1.7 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by 100 points and 50 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 1.5% and 1% respectively. The rupee is trading at 50.84 to the dollar.

As per a leading business daily, government has decided to lift the priority for utilisation of gas for city gas distribution (CGD) projects to the second place, after the fertilizer sector. Earlier, CGD was placed fourth in the gas utilisation policy below fertilizer, petrochemical and power projects. As such, CGD projects will be allocated 5 million metric standard cubic metre (mmbtu) gas per day supplied from Reliance’s KG D6 field, which is expected to start production from next month. However, the sops have been restricted to the domestic consumers and CNG pumps, and not for the commercial use. It may be noted that eight companies including Reliance Industries, GAIL, CAIRN and Indian Oil have bid for supplying CNG to automobiles and PNG to households. This development would make bidding process viable due to assured gas supply. Energy stocks are trading firm led by IOC and Reliance Industries.

Banking stocks are trading weak led by ICICI Bank and HDFC Bank. As per a leading business daily, Indian policy makers have decided to go slow on permitting easy entry for foreign banks into the country. Earlier, RBI had drawn a roadmap to allow wider access to the foreign banks in the country by allowing more branch licenses to them. However, the global financial crisis has led the policy makers to revert their earlier plans. This development is beneficial for the domestic banks as it would lessen the competition. Also, the policy makers are looking at consolidation among the PSU banking players.

The Indian markets started the day on a firm note. Buying activity is being witnessed across the board. While stocks from the capital goods, power and energy sectors are leading the pack of gainers, stocks from the banking sector are at the receiving end. The overall advance to decline ratio is poised at 1.6 to 1 on the BSE. The US and European markets closed in the red yesterday. The Asian markets are also currently trading mixed.

The BSE Sensex and the NSE Nifty are trading higher, up by around 141 points and 26 points respectively. The BSE Midcap and Smallcap indices are also trading firm, up by 0.7% and 0.6% respectively. The rupee is trading at 51.02 to the dollar.

FMCG stocks are trading mixed. While Marico and HUL are garnering investors’ interest, P&G and Godrej Consumers are out of favour. As per a leading business daily, Godrej Consumer Products is eyeing target companies for acquisitions of up to US$ 1 bn abroad. The company is planning to sell its products in countries like China, Brazil and Nigeria. It is targeting companies offering hair care products internationally. It may be noted that the company has made several international acquisitions in the past few years. In 2005, it acquired Keyline Brands, a UK based provider of personal care products. In 2006, it bought hair color company Rapidol and last year it acquired hair accessory maker Kinky. Godrej Consumer had already raised US$ 79 m through a rights share issue in the current financial year. This money will be utilised to fund possible acquisitions.

Pharma stocks are trading firm led by Wockhardt, Divi’s Lab and Ranbaxy. As per a leading business daily, Dishman Pharmaceuticals will establish a Rs 350 m drug formulations unit at Bavla in Gujarat. This formulation facility would be utilized to provide contract research and manufacturing (CRAM) services to European and US companies. It may be noted that Dishman is in talks with a client for orders which will account for 30% of the unit's capacity. This is a positive for the company as this move will enhance its revenues from the custom manufacturing business, which currently accounts for 75% of total sales.