Closing bell 8th April 2009

Closing bell 

The markets recouped their earlier losses and are currently trading in the positive on account of buying activity witnessed at lower levels during the previous two hours of trade. Stocks from the software, auto and energy sectors are leading the pack of gainers, while select stocks from the metals, engineering and banking sectors are trading weak. The overall advance to decline ratio is poised at 2.6 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by around 20 points and 30 points respectively. The BSE-Midcap and BSE-Smallcap indices are trading higher, up by 2.5% and 3.5% respectively. The rupee is trading at 50.41 to the dollar.

Real Estate stocks are trading mixed. While DLF is trading lower, HDIL and HCC are trading higher. As per a leading business daily, India’s largest real estate developer DLF plans to raise around Rs 9 bn by selling at least eight plots ear marked for hotels across the country in the next three months in order to fund other hotel projects, which are due to begin construction soon. It is believed that the company is in talks with leading hotel companies like ITC, Hyatt, Accor and Park Hotels etc for sale of the plots. It may be noted that the company had earlier planned to build over 25,000 hotel rooms in more than 40 cities and tourist destinations across India. However, the current global crisis has made capital scarce and expensive. Moreover terror attacks in India and recession in the developed economies has hit the tourism industry. Interestingly several real estate developers, who forayed into the hotels business in the past few years are also looking for an exit.

Steel stocks are trading lower led by JSW Steel, SAIL and Tata Steel. As per a leading business daily, Tata Steel has registered a 9% YoY growth in its sales volume during FY09, on a standalone basis. The company registered a 45% YoY growth in volumes in March 09 on account of a revival in demand led by auto, white goods and infrastructure sectors. The company sold around 5.23 m tonnes in FY09 wherein it achieved highest ever sales of flat products (primarily used by auto and white goods sectors) at 3.22 million and long products (mainly used for construction) sales at 2 million tonnes. The saleable steel production grew by 11% YoY to 5.30 m tonnes in FY09, while hot metal production grew by 14% YoY to 6.2 m tonnes.

Though still trading in the red, markets pared some of their losses during the previous two hours of trade as buying activity was witnessed at lower levels. Stocks from the banking, energy and metals sectors are leading the pack of losers, while select FMCG, software and pharma stocks are trading firm. The overall advance to decline ratio is poised at 1.6 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty indices are trading lower, down by around 290 points and 60 points respectively. However, the BSE-Midcap and BSE-Smallcap indices are trading higher, up by 0.7% and 1.3% respectively. The rupee is trading at 50.52 to the dollar.

Auto stocks are trading mixed. While Tata Motors is trading higher, M&M is trading lower. As per a leading business daily, M&M expects a revival in the domestic tractor demand on back of farm loan waiver and lower interest rates. The company expects a 3% YoY to 5% YoY growth in the domestic tractor market during FY10 as compared to a flat growth in the last fiscal. It may be noted that less than 10% of farmers own tractor currently and more than 35% farmers hire them. The higher demand is also reflected due to rising labour cost on account of migration to urban areas. However, the export market witnessed a fall of 82% YoY during the last fiscal due to slowdown in the US, which is the major export market. In response, the company is increasing its focus on the Chinese markets due to its favourable government policy. In fact, this market had grown at a CAGR of 32% during the last five years.

FMCG stocks are trading mixed. ITC and GSK Consumer are trading higher, while Britannia is trading weak. As per a leading business daily, FMCG companies would not benefit from the lower commodity prices during the coming quarter on account of depreciating rupee. While the raw material costs have came down by around 50% from their peak, Indian rupee has depreciated by 34% against the dollar. Further, on account of lower inflation and down trading, the companies are not able to pass on the price hikes. Hence, the companies would not be able to enjoy higher margins.