Broad-based buying aids indices

Mon, 21 Jun 11:30 am

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After starting today's session on a positive note in the morning Indian indices have gained further grounds. Key Asian markets are also witnessing strong buying interest. Stocks from metals and realty space are witnessing strong buying interest while stocks from the IT and Oil & gas space are trading flat.

The BSE-Sensex is trading higher by around 320 points, while the NSE-Nifty is up by about 73 points. Buying interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 1.1% and 1.3% respectively. The rupee is trading at 45.55 to the US dollar.

Engineering stocks are trading well in the green with L&T, Punj  Lloyd, and Thermax leading the gains. L&T's electrical and electronics business division (EBG) expects to double sales by 2015 to Rs 80 bn. Increased activity in India's power sector is one of the major reasons for this push. India plans to add over 200,000 MW of installed capacity by the end of the 12th five-year plan.

The EBG division offers solutions for the power sector in low and medium voltage categories. This business currently contributes around 10% of L&T's total sales. In order to achieve a push forward in turnover, the company plans to invest over Rs 10 bn in new manufacturing facilities and upgrading existing ones. This division plans to grow by around 15% YoY till it reaches its target revenues. 25% of sales are expected from overseas operations. L&T's board is also considering a proposal to integrate the EBG division with its subsidiary, L&T Power. This will bring more synergy and leverage internal strengths in power and related sectors.

Pharma stocks are marginally in the green. Gainers here include Cadila Healthcare and Glaxosmithline Pharma. As per a leading business daily, the consortium of Indian Banks have given in-principal commitment for a loan to Fortis Healthcare (Fortis) in a takeover battle for Singapore's Parkway Holdings (Parkway). It should be noted that Singapore's securities regulator has given Fortis a final deadline until July 30 to make a full offer for Parkway – which is also a subject to takeover bid by Malaysian sovereign fund Khazanah. Fortis Healthcare currently owns about 25% in Parkway and will need additional funds to the tune of US$2.3 bn to complete the buyout. The consortium of Indian banks have expressed willingness to disburse US$ 2 bn. It should be noted that Fortis wanted to gain a controlling stake in Parkway before the Malaysian fund made a surprise entry last month leading to a takeover battle between the two.