After a weak opening, Indian stock markets have been steadily gaining momentum and moved higher in the last two trading hours. Majority of the sectoral indices are trading in the green. Capital goods, realty and IT stocks are the biggest gainers. Only metal and consumer durable stocks are in the red.
Most of the software stocks have been trading positive with Tech Mahindra, TCS and Mahindra Satyam being the biggest gainers. As per a leading financial daily, the merger of Mahindra Satyam with Tech Mahindra has been given approval by the boards of the two companies. The exchange ratio for the merger has been fixed at 2:17 which means that a shareholder holding 17 shares of face value of Rs 2 each of Mahindra Satyam will be entitled to receive two shares of face value of Rs 10 each of Tech Mahindra. The merger is effective from April 2011. As per Tech Mahindra, the merger will result in combined revenue of about US$ 2.4 bn and more than 350 clients across different geographies and industrial sectors. Tech Mahindra has been feeling the pain inflicted by the retendering of contracts by its largest client British Telecom (BT). The revenues from this account have been on the decline for the last two quarters. The good sign during the December 2011 quarter was that the company continued its growth momentum in the business from non-BT accounts as well as from the rest of the world markets.
Majority of the energy stocks are trading positive with Essar Oil trading the strongest and Gail trading the weakest. As per a leading financial daily, the government has allowed industrial units, located near gas pipelines but not having any gas allocation, to use the domestic natural gas and bear the additional cost of supplying an equivalent quantity of imported LNG to original allotee of the gas. The swapping policy has been framed to tackle the acute gas shortage in the country due to a steep fall in the gas output of KG-D6 block of Reliance Industries. The gas suppliers, consumers and gas transporters have been directed to co-operate in the cost-effective swap agreement.