Persistent buying pushes markets higher

Wed, 6 Jun 01:30 pm

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Persistent buying activity led the Indian equity markets to rise steadily during the previous two hours of trade. Stocks across the board are witnessing buyers' interests with those from the auto, FMCG, and power leading the pack of gainers. Stocks from the Oil and gas and healthcare spaces are amongst the top underperformers currently.

The Sensex today is trading higher by about 320 points, while the NSE-Nifty is trading higher by about 100 points. The BSE Mid cap and BSE Small cap indices are up by about 1.2% and 1% respectively. The rupee is trading at 55.6 to the US dollar.

Auto stocks are the top gainers on the bourses currently with Tata Motors and Exide Industries leading the pack of gainers. It is reported that Hero MotoCorp plans to invest Rs 25.8 bn to set up two manufacturing facilities in Gujarat and Rajasthan and a new Research and Development (R&D) center by 2013-14. This R&D facility, spread across 250 acres near Jaipur, Rajastan will cost Rs 4 bn to set up. This facility would enable Hero to design and develop bikes, scooters and other two-wheelers independently after its 27 year old Joint Venture with Honda came to an end in December 2010. In FY12, the company saw a stellar growth in volumes, which crossed the 6 million mark. With these new manufacturing plants, the installed capacity will be raised to 9 million units. The first is expected to come up at Neemrana by 1QFY14 with Rs 4 bn investment and will have an initial installed capacity of 750,000 units per annum. The proposed Gujarat plant will see an investment of Rs 11 bn and have a capacity of manufacturing 1.2 million units. This is expected to be set up by 2QFY14. Besides these, the company also plans to invest Rs 5 bn in capacity expansion of its existing plants at Haridwar, Daruhera and Gurgaon. The company will not require any external funds for any of these investments as it will be all funded through the company's cash reserves of Rs 40 bn.

Mining stocks are currently trading firm led by MOIL, Sesa Goa and National Mineral Development Corporation (NMDC). As per a leading financial daily, the Fuel Supply Agreement (FSA) to be signed by Coal India Ltd (CIL) is witnessing a wave of disapproval by power producers. In March 2012, the Prime Minister's Office had asked CIL to sign FSA with power generation companies at a minimum supply of 80% of the total coal requirement. CIL had informed the power producers that only 60% of the coal demand can be met presently and the supply will be scaled up to 80% in the coming years. But the Power Ministry has insisted on a minimum supply level of 65% if CIL is unable to meet the mandated commitment of 80%. Another bone of contention is the penalty clause. CIL has suggested a penalty of 0.01% for failure in the timely delivery of fuel but wants the penalty to be imposed only after three years of signing the pact. Many power producers, including National Thermal Power Corporation (NTPC) do not agree with the clauses introduced in FSAs and have refused to sign supply agreements with CIL. Reportedly, 14 power utilities have inked FSAs with CIL so far.