In the face of high oil prices and subdued expectations of economic growth, stock prices have been exceptionally strong. But the real test of the upmove will be after Thursday
The upmove in the Indian market continued today with the Sensex opening at 19,179, 58 points above its previous close and the Nifty was 20 points up at 5,756. The US markets were strong yesterday.
The uptrend in the Asian space emanating from the optimism that Japanese factories have resumed production after the devastating earthquake earlier this month, spurred investor sentiment in the domestic market. Institutional buying pushed the indices further northwards as trade progressed. All sectoral indices were in the positive zone in morning trade.
Share prices are in an overbought zone and are due for a correction. Besides, the exceptionally strong showing will be tested on Thursday and Friday, after the derivatives of March and the financial year are over.
US-based International Paper (IP) said today that it will buy a key stake in India's Andhra Pradesh Paper Mills (APPM) for up to $423 million, as it seeks a foothold in the booming Indian economy. IP said it would buy 53.5% of APPM from the parent LN Bangur group for $257 million in cash and make a public offer for an additional 21.5% of APPM's shares for $104 million. Besides, it has agreed to a $62 million non-compete payment to the sellers, taking the deal's potential value to $423 million.
The APPM stock hit the upper circuit limit of 19.99% on the Bombay Stock Exchange at Rs236.15 a piece today. A similar trend was seen on the National Stock Exchange where the stock touched Rs236.95, a gain of 20.01%.
The indices touched the day's high minutes after 1pm, with the Sensex at 19,357 and the Nifty scaling 5,803. However, profit booking amid choppy trade led the market to its intra-day low at 2.20pm. The Sensex fell to 19,179 and the Nifty was at 5,754 at the day's low.
Another bout of buying in the last half hour pushed the indices marginally higher and they closed in the green for the seventh consecutive day. The Sensex settled 169 points higher at 19,290 and the Nifty ended 51 points up at 5,787 as the benchmarks logged their best closing since 13th January. The advance-decline ratio on the NSE was 1341:428.
As we mentioned yesterday, the Nifty has witnessed a continuous rally of seven consecutive days 77 times since July 1990 and the current rally is the 78th instance. Of the prior 77 times, the Nifty has been positive 42 times on the eighth trading day and 35 times in the negative.
The Sensex has added 1,451 points in this financial year-end rally that began on 22nd March and the Nifty has put on 423 points in the period.
After being left behind for the last couple of days, the broader markets outperformed the Sensex today with the BSE Mid-cap index surging 1.51% and the BSE Small-cap index jumping 2.20%.
With the exception of the BSE Fast Moving Consumer Goods index, all other sectoral gauges ended in the positive. BSE Consumer Durables (up 3.98%), BSE Realty (up 3.14%), BSE Healthcare (up 1.95%), BSE Bankex (up 1.67%) and BSE Auto (up 1.49%) were the top gainers. BSE FMCG fell 0.38%.
Cipla (up 5.17%), Jaiprakash Associates (up 4.19%), DLF (up 3.83%), Mahindra & Mahindra (up 3.46%) and State Bank of India (up 3.27%) were the top Sensex gainers. Hindalco Industries (down 1.15%), ITC (down 0.84%), BHEL (down 0.47%), Tata Power (down 0.30%) and ONGC (down 0.28) were at the bottom of the index.
Markets in Asia posted smart gains with the Nikkei 225 leading the pack on weakening of the yen against the dollar and news that some companies will restart production that was halted after the earthquake in Japan. Gains in the region's stock markets are an indication that the global economic recovery is still strong. However, the Shanghai Composite, considered the best performing market so far this year, ended lower today.
The Hang Seng surged 1.70%, the Jakarta Composite gained 1.38%, the KLSE Composite rose 0.76%, the Nikkei 225 jumped 2.64%, the Straits Times advanced 1.26%, the Seoul Composite rose 0.93% and the Taiwan Weighted climbed 0.58%. Bucking the trend, the Shanghai Composite lost 0.07% today.
Back home, continuing its declining trend for the eighth consecutive month, India's iron ore exports in February went down by 18.60% to 10.13 million tonnes (MT), from 12.54 MT in February 2010.
Outbound shipment of the vital steel-making raw material also declined in the April 2010-February 2011 period by 17.98% to 85.43 MT, mainly on account of a ban on exports imposed by the Karnataka government.
Foreign institutional investors continued their buying spree on Tuesday, emerging as net buyers of stocks worth Rs1,291.54 crore. On the other hand, domestic institutional investors were net sellers of stocks worth Rs474.17 crore.
Dr Reddy's Laboratories (up 2.65%) today said it has acquired GlaxoSmithKline's US penicillin manufacturing facility and the rights to the Augmentin and Amoxil brands in the United States for an undisclosed sum.
The acquisition of the oral penicillin manufacturing facility in Bristol and product portfolio was completed on Tuesday and is pursuant to the agreement signed by the companies on 23 November 2010.
IT services major Tata Consultancy Services (up 1.06%) is planning to expand its operations in the European healthcare segment. The company is also planning to acquire companies in the German market which can bring certain domain expertise, particularly in the healthcare segment.
Lanco Infratech (down 1.13%) has signed an agreement for raising debt of Rs5,500 crore from a consortium of financiers led by state-run Power Finance Corporation to finance its upcoming 1,320MW power generation unit in Chhattisgarh. It has raised the debt at an average rate of around 12%-12.5%. The company has signed the loan document for Amarkantak unit 3 and 4, both the expansion units are scheduled to be commissioned in phases by 2014.
BHEL has bagged a Rs5,450 crore order from a Bajaj group company for supplying power equipment for setting up the 1,980MW thermal power project at Lalitpur in Uttar Pradesh
State-owned BHEL said it has bagged a Rs5,450 crore order from a Bajaj group company for supplying power equipment for setting up the 1,980MW thermal power project at Lalitpur in Uttar Pradesh.
"The order has been placed on BHEL by Lalitpur Power Generation Company Ltd (LPGCL), a Bajaj group company, for setting up the 1,980 MW Lalitpur Supercritical Thermal Power Station (TPS) in Uttar Pradesh," BHEL said in a statement.
The company has bagged the main plant package contract for three coal-fired thermal units of 660 MW each with supercritical parameters, it said.
BHEL has commissioned about 9,900 MW of power generating sets of various ratings in the State so far.
BHEL is already executing five major contracts for supply of main plant equipment with supercritical parameters for various power projects in the country.
The projects are-2x660 MW Barh Thermal Power Project Stage-II of NTPC, 3x660 MW Bara Thermal Power Project of Jaypee Group company, 2x800 MW Yeramarus and 1x800 MW Edlapur Thermal Power Projects of Raichur Power Corporation Ltd and the 1x700 MW Bellary Thermal Power Project (Unit 3) of Karnataka Power Company Ltd.
BHEL is also executing a contract for supply of supercritical steam generators to APGenco's 2x800 MW Krishnapatnam Thermal Power Project, which is in an advanced stage of completion.
BHEL has established the capability to deliver 15,000 MW of power equipment a year and further augmentation to 20,000 MW a year is under way.
On Wednesday, BHEL ended 0.47% down at Rs2,058.15 on the Bombay Stock Exchange, while the benchmark Sensex gained 0.89% to 19,290.18.
GMR Hyderabad International Airport Ltd has devised a three-pronged strategy to improve its revenues in the wake of a dip in the real estate market in Hyderabad
GMR Hyderabad International Airport Ltd (GHIAL), promoted by the GMR Group, has devised a three-pronged strategy to improve its revenues in the wake of a dip in the real estate market in Hyderabad, sources close to the development said.
"GHIAL's primary focus will be improving passenger traffic. The second focused area will be cargo and the third priority will be developing aerospace business, as accrued losses of the company stand at Rs250 crore," sources said.
The company, which had announced big plans to develop an aerotropolis around the Rajiv Gandhi International airport in Hyderabad, is now going slow on that front as gloom looms large over the Hyderabad real estate market on account of the ever-changing socio-political scenario in Andhra Pradesh.
"Property development is a long-term thinking now. Lot of over-supply in terms of office space and hotels is there in Hyderabad. There is no point in further supply. It is already crowded," sources said.
The group had earlier announced that they are in discussions with various chains of hospitals to set up a 500-bedded hospital at the airport here as part of their plan to develop the aerotropolis.
"But there is no development in the hospital project. We are in talks with an American Group for the hospital. We feel situation is not conducive now. We are not pushing for that," a senior GMR official said.
Group Chairman GM Rao had said they wanted to develop seven 'ports' which would form the aerotropolis with a view to support revenue and the growing airport traffic in future.