Led by buying in stocks from the auto and IT sectors, Indian markets managed to close marginally in the positive today. On the broader BSE, more than one stock gained today for every one that closed in the negative. Among other key Asian markets, China (up 0.3%) and Japan (up 1.8%) led the pack of gainers.
The BSE Sensex and NSE Nifty closed with gains of around 50 points (0.3%) and 10 points (0.2%) respectively. Mid and small cap stocks followed suit. The BSE Midcap and BSE Smallcap indices closed up by around 0.1% each. The rupee was trading at 46.38 against the US dollar at the time of writing this.
Realty stocks closed mixed today. While gains were seen in Ackruti City and DLF, selling pressure marked trading in Peninsula Land and Ansal Properties. Stocks from the real estate sector have been among the most volatile over the past few months. This is given that investors fear interest rates to move up following the rising inflation that has raised worries for the RBI. While the central bank has already tinkered with the rates somewhat, it doesn't seem to be finished as yet. We see higher interest rates as having a negative impact on realty demand given that customers are yet to come out of the slowdown blues. We also see small realty companies as being the worst hit as consolidation intensifies within the sector.
Anyways, in another backlash against India's archaic property rules, HDFC's Chairman Mr. Deepak Parekh has asked policymakers to take bold initiatives for developing urban real estate sector. As he's written in the company's latest annual report, "Urban growth can be driven through radical changes in land acquisition policies, improved governance and inculcating skills and innovative capabilities in people." He has also laid emphasis on the urgent need for India to build at least two dozen satellite cities around Tier-1 and Tier-2 cities, given the growing urbanization.
Power stocks also closed mixed today. Key gainers here included NHPC and GVK Power. NTPC and Tata Power closed in the red. As per a leading business daily, NTPC is looking to buy a controlling stake in a coal field in Australia. While the exact nature and size of the deal is not yet known, the company is looking to bring to India around 10 m tonne per annum (MTPA) of coal.
An acquisition like this talks a lot about the urgency with which Indian power companies like NTPC are eyeing such assets abroad. While some of these companies have also won tenders for mining coal in India, execution here is pretty slow. And the lure of buying an operational coal mine is any day brighter. We see these international coal assets as having big importance for a company like NTPC. Not only is this considering its huge expansion plans, but it also stems from the shortfall in coal supplies it is facing from domestic coal suppliers like Coal India Ltd. Anyways, the company already has plans to set up 4,000 MW of new power plants this year.
In taking the price competition in the telecom sector to another level, Reliance Comm. today announced an aggressive pricing for its mobile internet services. The company will now be offering unlimited internet usage to its mobile subscribers at as low a cost as Rs 99 per month. This offering seems as a precursor to the company launching its 3G services, where it has won licenses to operate in several key areas including Mumbai and Delhi. The company had recently talked about selling a [art stake in its tower business Reliance Infratel to part fund its 3G capex. Some in the industry believe that 3G and BWA auctions that completed recently have led to very aggressive bidding and as such 3G pricing is not expected to be very cheap. Thus it will be interesting to see how players like Reliance Comm. make a profitable business of these new services despite their aggressive pricing tactics!