Closing Bell 9th april 2009

Closing Bell 9th april 2009

 

Today’s trading session was marked with intense volatility as the benchmark index, the BSE-Sensex, crossed the dotted line numerous times during the day. The Sensex closed with gains of around 60 points, while the NSE-Nifty ended flat. Profit booking at higher levels led to the markets ending lower after a strong start. Stocks from the mid-cap and small-cap space ended the day in the green as well. Buying activity was witnessed in stocks from the realty and metal sectors. However, stocks from the auto and FMCG sectors bore the brunt of profit booking.

 

The Asian markets ended on a firm note. Most European indices are trading in the green currently. Rupee was trading at 49.93 against the US dollar at the time of writing.

 

As per a leading business daily, RIL and ONGC subsidiary OVL may each pick up 20% stake in at least one of three large oil fields in Venezuela’s Carabobo region. Each of these oil fields is estimated to have 40 to 50 bn barrels of proven oil reserves. RIL and OVL will together pick up 40% stake while the balance 60% would be held by Venezuela’s national oil company PdVSA. It may be noted that RIL is already importing waxy Venezuelan crude oil for its Jamnagar refineries because its complex refineries have the capability to process relatively cheaper Venezuelan crude where margins are high. These developments are in line with the fact that India imports over 70% of its energy requirements thus incentivising Indian companies to acquire oil assets abroad. While the stock of RIL ended almost flat, ONGC ended the day in the red.

 

Application forms for the Nano will be accepted starting today by Tata Motors. These application forms are the costliest for any automobile in India yet. Priced at Rs 300 each, it is being estimated that already 50,000 have been sold, thus netting the company about Rs 15 m which would be good enough to even finance a low-profile ad campaign for the car. What remain be seen is whether the Nano will be able to finance the parent out of its debt woes. Tata Motors ended higher today.

 

India’s industrial output fell 1.2% YoY in February compared to a growth of 9.5% YoY in the same month last year. Manufacturing output, which accounts for the bulk of the weight in the overall index, declined 1.4% YoY in February, against 9.6% YoY growth in the same month last year. While mining output also fell 1.6% YoY, that for electricity increased by 0.7% YoY during the month.

 

Inflation, as measured by the WPI, declined to 0.26% for the week ended March 28. This drop is mainly on account of food items and mineral products. However, manufactured items like imported edible oil were dearer by 6%. This is as against an inflation of 0.31% in the previous week. The corporate are rooting for lower interest rates. However, it is unlikely that the RBI would give in to the pressure in near term.

 

The markets remained volatile on account of alternate bouts of buying and selling activity witnessed during the previous two hours of trade. Stocks from the construction, banking and power sectors are leading the pack of gainers, while select stocks from the software, FMCG and energy sectors are trading lower. The overall advance to decline ratio is poised at 2.2 to 1 on the BSE.

 

The BSE-Sensex and NSE-Nifty indices are trading higher, up by around 60 points and 5 points respectively. The BSE-Midcap and BSE-Smallcap indices are trading higher by 1.3% each. The rupee is trading at 50.03 to the dollar.

 

Telecom Stocks are trading mixed. While Idea Cellular is trading lower, Bharti Airtel is trading higher. As per a leading business daily, Idea Cellular, India’s third largest GSM operator plans to invest around Rs 10 bn on its telecom operations in Orissa in the next three years. The company has recently launched its GSM mobile services in Orissa which is expected to cover around 360 towns by next month and around 2,200 towns by March 2010. It may be noted that the tele-density in Orissa currently stands at around 20% as against the national average of 35%. Furthermore, Orissa added around 3.2 m mobile subscribers in FY09 and has been recording a growth of 54% YoY. This provides a huge opportunity for the company. Idea Cellular currently has a presence in 16 out of the 22 telecom circles and plans to launch its services in six remaining circles by FY10.

 

Automobile stocks are trading mixed. While Tata Motors and Ashok Leyland are trading higher, Bajaj Auto and Hero Honda are trading lower. As per a leading business daily, the Society of Indian Automobile Manufacturers (SIAM) has projected that the automobile sector would be back on track and growth would pick up in FY10. As per the SIAM report, passenger vehicles and commercial vehicles are expected to grow between 3% to 5% and 7% to 10% respectively. Three wheelers and two wheelers are projected to grow between 0% to 5% and 5% to 8% respectively. However, most automakers are not convinced with the projections, although some are cautiously optimistic

 

Taking cues from their Asian peers, the Indian indices began the day well above the dotted line. While buying is being witnessed in stocks from the realty and capital goods space, stocks from the energy, consumer durables and FMCG sector are at the receiving end. The overall advance to decline ratio is poised at 2.6 to 1 on the BSE. As regards global markets, the US markets ended on a positive note, while the European markets closed mixed. The Asian indices are currently trading firm.

 

While the BSE Sensex is trading higher, up by around 110 points, NSE Nifty is trading lower, down by 10 points. The BSE Midcap and Smallcap indices are trading higher by 1% each. The rupee is trading at 50.01 to the dollar.

 

Pharma stocks are trading firm led by Wockhardt, Piramal Healthcare, and Panacea Biotech. As per a leading business daily, Wockhardt is planning to hive off its biotechnology products division into a separate company. Wockhardt has one of the largest portfolios of off-patent biotech drugs under development in India. At present, the biotechnology products division contributes 5% of total sales. The company is vying for a strategic investment from a global pharmaceutical major. It may be noted that Wockhardt is under a huge debt burden, and needs around US$ 140 m (around Rs 7 bn) to redeem its foreign currency convertible bonds (FCCB) by September this year. Recently the company has opted for the corporate debt restructuring (CDR) route. Sale of the biotech division would help the company generate money to pay off some of its debt and focus on its core business.

 

Cement stocks are trading mixed. While India Cement, Ambuja Cements and Ultra Cements are leading the pack of gainers, the pack of losers is being led by JK Lakshmi Cements and Prism Cements. As per a leading business daily, ACC is planning to invest Rs 16 bn in 2009 and Rs 13 bn during 2010 despite the ongoing economic slowdown. The company is also planning to enhance capacity at its Bargarh plant to 2.3 m tonnes (mt) with a 30 MW captive power plant. The project is expected to be completed by mid-2009. Furthermore, the company is planning to expand capacity of its clinker facility at Wadi and set up two new greenfield grinding plants in Karnataka by the end of 2009. Also, a 7,000-tonne per day clinker line and an additional 25 MW captive power plant in Chanda are expected to go on stream by mid-2010. These expansions will help the company in increasing its capacity from 23 mt to 30 mt. The company will fund these projects through its internal accruals. It may be noted the company has a reserve and surplus of Rs 46.36 bn as on December 31, 2008. The stock is currently trading lower.