Indian indices languished in the red on account of profit booking in the heavyweights over the last 2 hours of trade. Stocks from the pharma and realty space are among the top gainers while stocks from the IT and banking space are the top losers.
The BSE-Sensex is trading down by 51 points while NSE-Nifty is trading 12 points below the dotted line. BSE-Midcap index is down by 1.6% while BSE-Smallcap index is trading 0.3% above yesterday's closing. The rupee is trading at 46.59 to the US dollar.
Construction stocks are trading mixed with DLF and Phoenix Mills trading firm, while HCC and Lok Housing and Construction are trading weak. As per a leading financial daily, India's first planned hilled city, Lavasa, being built by HCC has come under the scanner of the federal ministry of environment and forests. The ministry had received representation from people saying that Lavasa has violated environmental norms. In mid July, the ministry had written to the Maharashtra government asking for details of environmental clearances. To this the government has sent an initial reply that the clearance for only the first phase has been given and not for the whole project.
It may be noted that Lavasa is a Rs 470 bn project and is divided into 4 phases. The first phase is expected to be completed by 2012 and the fourth phase by 2021. This project is expected to be a major value addition to HCC's bottomline. In fact according to market sources HCC is planning to list Lavasa on the stock exchange by the end of 2010. This would result in significant value unlocking for the shareholders of HCC. However, in the absence of environmental clearances, HCC may face delays in project execution.
Stocks from the capital goods space are trading mixed with Lakshmi Machine Works, AIA engineering and L&T trading firm, while Suzlon Energy, Crompton Greaves and Jyoti Structures are trading weak. The stock of wind energy major Suzlon Energy has been seeing some pressure over the past few trading sessions. The reason for the same is the world's largest wind energy turbine manufacturer, Vestas Wind Systems, cutting its guidance substantially. In fact, the company recently announced its results for the quarter ended June 2010. It reported a massive loss of 110 m Euros as against a 43 m Euros profit last year. Cumulatively, it has a loss of over 160 m Euros in the last year. Similar to the problems that Suzlon is facing, Vestas faced problems related to delayed orders caused by the current credit crunch. In addition to delivery delays, tight financing and regulatory uncertainty are also key factors behind the poor performances. Considering that Suzlon is amongst the top wind turbine manufacturers in the world, one cannot ignore Vestas' outlook. However, recently, Suzlon's management had stated that they are seeing the scenario picking up in emerging markets, while those in the US and Europe remain sluggish. The stock of Suzlon is currently trading at its 52-week low. During the quarter ended June 2010, the company reported a 42% YoY decline in revenues and a net loss of Rs 9 bn. The company reported a loss of Rs 5.5 bn at the operating level itself.