'Realty' strikes the bull run

Wed, 22 Sep Closing

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Last few day's bull-run finally came to an end today as Indian markets fell on profit booking. Stocks from the realty and engineering sectors led today's weakness. Banking, pharma, and realty stocks closed weak. Banking stocks were among the few gainers. The overall market breadth was negative as there were more than 2 losers for every 1 stock that closed in the positive.

BSE Sensex and NSE Nifty closed with losses of around 60 points (0.3%) and 20 points (0.3%) respectively. Mid and small-cap stocks followed suit, as the BSE Midcap and BSE Smallcap indices closed weaker by 0.4% and 0.2% respectively. The rupee was trading at 45.48 against the US dollar at the time of writing this.

Power stocks closed weak today. GVK Power, PTC India, and Reliance Power were the biggest losers. Earlier a leading business daily reported that NTPC, India's largest power generation company, is looking to start its coal mining operations from next year. The company has been in the eye of storm for delaying its coal mining from the assigned blocks. Now the company is looking to begin mining from its Pakri Barwadih mine in Jharkhand from 2011 onwards. Also, as against what was published in the papers a few days back, the company has indicated that it is not looking to backtrack on its hydropower plans even after the government scrapped its Loharinag Pala project in Uttarakhand on environmental concerns. NTPC had already spent around Rs 26 bn on this project and the government has said that it will be compensated for this.

Pharma major Sun Pharma has completed the acquisition of a controlling stake in the Israel based Taro. Thus, Sun Pharma has increased its economic interest in Taro to 48.7% and its voting rights to 66%. It must be noted that although Sun Pharma had announced its acquisition of Taro in 2007, the latter's promoters later terminated the agreement sparking a legal feud between the two. Recently, the US and Israeli courts ruled in favour of Sun Pharma. At the time of acquisition Taro was a loss making company but had around 90% of its sales from the US market and hence the rationale for the acquisition. Sun Pharma has already invested US$ 60 m into Taro to prevent it from going bankrupt. With this acquisition, Sun Pharma intends to build on Taro's market presence in the US, Israel and Canada. It also aims to leverage on Taro's expertise in dermatology (related to skin) and pediatrics. Anyways, pharma stocks closed weak today. The losers' pack was led by Wockhardt, Glenmark, and Biocon. Sun Pharma also closed with marginally losses.

In what could bring more cheer to the stock markets, CMIE, a leading economic think-tank has predicted that India's GDP is expected to grow at 9.2% during the current fiscal (FY11). It expects this growth to be backed by a surge in economic activities. What is more, this level of growth is expected to come on a 7.4% growth that the Indian economy had achieved during the last year (FY10). CMIE expects the industrial sector, including construction, to grow by 9.4% during the current year, better than the 9.2% rate it clocked in FY10. Further, it sees the services sector growing by 10%, as compared to 8.6% in FY10. However, the best performance is seen coming from the agriculture and allied sector that is estimated to grow by 5.7%.