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Consolidating in a narrow zone
Mon, 21 Mar 01:30 pm

After trading in a flat territory during the previous two hours of trade Indian stock market indices failed to gather any momentum and continued to trade in a narrow zone. Stocks from the healthcare and FMCG are trading strong, while those from the realty and IT space are trading weak.

Currently, the BSE-Sensex is up by 23 points, while NSE-Nifty is trading 7 points above the dotted line. However, BSE Midcap and BSE Small cap indices are both down by 0.13% and 0.06% respectively. The rupee is trading at 45.04 to the US dollar.

Finance stocks are trading mixed with Mahindra Finance and Sundaram Finance leading the gains. However, PFC and Edelweiss Capital are trading weak. REC is planning to raise about US$ 1 bn (Rs 45 bn) via a corporate bond issue in the US. It may be noted that recently the company raised US$ 500 m (Rs 22.5 bn) through a bond issue in the international market. As interest cost in the international market is significantly lower than in the domestic market, REC has been aggressively raising funds in the foreign markets via ECBs and corporate bond issues. Further, raising money via issuing infrastructure bonds (source of funds for REC) has not garnered much of an interest from the investors as interest rates of the banks have increased providing them with another alternative to park their excess funds. As far as the banking foray is concerned, REC is awaiting RBI's guidelines on the same and will take the decision in due course of time.

Energy stocks are trading firm with Cairn India and GAIL leading the gains. However, Gujarat Gas is trading weak. In order to meet the local fuel demand, HPCL may defer its planned shutdown of the Mumbai refinery to the month of September. Initially, the company had planned a shutdown of 15 days at its Mumbai refinery so as to undertake some routine maintenance work. However, an unanticipated increase in fuel demand has forced the company to defer its shutdown plans. It may be noted that HPCL runs a 130,000 barrels per day (bpd) refinery in Mumbai. Apart from HPCL, even IOC is considering revisiting its shutdown plans at some of its refineries. It may be noted that IOC had plans to shut down some of its units at Panipat refinery in May for routine maintenance. However, considering the sudden spurt in fuel demand it appears highly unlikely that the initial shutdown plans of both the refineries will go ahead as per schedule.

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