Realty, power stocks weigh on markets

Tue, 15 Mar 11:30 am

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Indian stock markets pared some of their opening loses on buying interest in heavy weights during the last two hours of trade. Stocks from the realty and power space have lost the most while stocks from the oil & gas and pharma space have lost the least.

The BSE-Sensex is down by 277 points while NSE-Niftyis trading 77 points below the dotted line. BSE Midcapindex is down by 1.4% while BSE Small cap index is trading 1.2% below yesterday’s closing. The rupee is trading at 45.25 to the US dollar.

Hotel stocks are trading weak led by Taj GVK and Indian Hotels. Hotel Leela Venture is planning an equity stake sale for an amount close to Rs 6 bn. According to the management, the company is in talks with 4 private equity players and will close the deal with one or two of them in the next 3-4 months. It will offer 14.95% of its equity to prospective investors by issue of fresh shares. Post this stake sale, the promoter holding is likely to come down to 50.5% from the present 55%. The company is also expected to raise about Rs 9.5 bn from sale of office commercial space and initiate projects on joint development of land. It has decided to sell a major portion of its commercial office space in Chennai. In Hyderabad and Bangalore, the hospitality company has decided to get into joint development agreements for residential or commercial development. These steps are being taken to reduce the debt of the company.

Hotel Leela had earlier launched two new properties, one each in Udaipur and Delhi. In future, it will be looking at development of land in Agra and Kerala. The Chennai property of the company is likely to commence operations from September this year.

Finance stocks are trading weak led by JM Financials and Prime Securities. As per a leading finance daily, Shriram Transport Finance Co (STFC), an Indian truck financier is expected to raise about Rs 30 bn. The company plans to raise this amount to expand its lending. However, the company’s spokesperson has stated that the company has no immediate need of finance. Going forward, STFC’s strategy is to increase its equipment financing business and boost assets under management to Rs 50 bn by March 2013. It may be noted that at present, the company has assets of about Rs 3 bn. STFC finances 1,200 vehicles daily and has applied for a banking license to extend its lending facilities. The lender’s vehicle finance business is expected to expand by 20% this year to about 350 bn and by another 20% next year.