Engg, metal stocks drag markets lower

Wed, 26 Sep 01:30 pm

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The Indian equity markets fell deeper into the red during the post noon trading session. While stocks from healthcare and FMCG spaces are amongst the most favoured, those from the metal and capital goods sectors are leading the pack of underperformers.

The Sensex today is trading lower by about 85 points (down 0.5%), while the NSE-Nifty is trading lower by about 25 points (down 0.5%). Stocks from the midcap and smallcap spaces continued to outperform their larger peers as the BSE Mid Cap and BSE Small Cap indices are up by over 3% and 0.5% respectively. The rupee is trading at 53.49 to the US dollar.

Stocks of electrical and lighting manufacturer Bajaj Electricals is trading lower while that of Havells India are trading marginally higher. As per a report by the Economic Times, Bajaj Electricals is looking at making acquisition, even as large as Rs 10 bn, in the area of electricals and lighting. The rationale for the same is its strong distribution network and good manufacturing set up. If the company acquires a good brand, it could use its distribution network and manufacturing setup to manufacture and market products. Given than the company is looking at acquisitions in its existing business segments is a positive sign. As per the management, there is enough scope in existing businesses and as such, no requirement to venture into other segments. While the company did not divulge information about how it would fund the acquisition, at the end FY12, it had about Rs 536 m of cash and about Rs 440 m of investments on books. Total debt on the books stood at about Rs 600 m as against a net worth of about Rs 7 bn.

Energy stocks are currently trading firm led by Gujarat Gas and Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd. As per a leading financial daily, Gujarat state Petroleum Corporation (GSPC) has raised Rs 30 bn through the bond market. The company has issued three different bonds having varying maturities of 8 years (9.39%), 10 years (9.45%) and 60 years (10.45%). The funds will be utilized to meet the capital expenditure requirement of Exploration & Production activities as well as to re-finance existing high cost short term loans of the company. Reportedly, GSPC had taken term loan of Rs 30 bn in 2010 through a consortium of 15 banks to finance the commercial development of its Deen Dayal field in the Krishna Godavari basin on Andhra Pradesh coast. The company holds working interests in 64 onshore and offshore exploration and production blocks both in India and overseas.