Power stocks are trading in the green led by GVK Power and Reliance Infra. Power Grid Corporation is expected to raise Rs 25 bn via issuing of corporate bonds by end of this month. The bonds would be for 4-15 years with a coupon rate of 9.5%. RBI (Reserve Bank of India) had last week raised the repo rate by 50 basis points (bps). Post this, the yields on the 10-year benchmark government security rose by around 15 bps. Yields on 10-year "AAA" rated corporate bonds issued by public sector units currently stands at around 9.45%. As a result of the series of rate hikes by the RBI, funding has become costlier.
Pharma stocks are trading in the green led by Zandu Realty and Dishman Pharma. Wockhardt has approached the Bombay High Court for legal clearance of its recently announced deal with Danone. It may be recollected that yesterday, Wockhardt announced its decision to sell its nutrition business to French food company, Danone. The company is trying to settle differences with its lenders regarding the same. Earlier, such a deal with US pharma company Abbott had faced resistance from some of the lenders of Wockhardt. The Indian pharma company's problems with lenders began after it failed to redeem its FCCBs (Foreign Currency Convertible Bonds) due to the financial crisis. As for the Danone deal, the hearing date has been fixed for September 6, 2011.