Engg, FMCG stocks help cut losses

Fri, 19 Nov 01:30 pm

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The Indian markets recouped a chunk of their losses and moved closer towards the dotted line during the previous two hours of trade. Currently, stocks from the capital goods spaces are leading the pack of gainers, followed by FMCG, and consumer durables stocks. Realty and banking stocks continue to be under pressure, followed by those from the energy and metals spaces.

The BSE-Sensex is down by 80 points (down 0.4%), while NSE-Nifty is trading lower 25 points (down 0.4%). The BSE-Midcap Index is down by 0.6%, while the BSE-Smallcap index trading lower by 0.2%. The rupee is trading at 45.24 to the US dollar.

The stock of Lakshmi Energy and Foods (LEAF) is trading firm on news of the company planning to hive off its energy business. This it intends to do by floating a wholly owned subsidiary company with the aim of unlocking the value of its green power business. This plan is yet to be firmed up by the company's Board of Directors. As per the company, after forming a new subsidiary, it may bring in fresh capital (into the energy business) by diluting the promoters' stake. These funds would be used towards expanding its green energy business. The company currently has an installed generation capacity of 30 MW. This business contributed to about 6% of the company's FY10 revenues. LEAF has aggressive plans to increase its power generation capacity to nearly 105 MW within a period of three years.

In addition to this, it has been reported that the company is looking at becoming a strong player in the basmati exports market. LEAF is believed to be exploring new overseas markets. This move is towards achieving its target of achieving Rs 5 bn worth of shipment which in turn is in tune with its strategy to crossing revenues of Rs 15 bn by September next year. Last year, the company exported rice worth Rs 2 bn. The company exports basmati rice to various countries such as Iran, UAE, Kuwait, Saudi Arabia, amongst others.

Banking stocks are trading weak with Andhra Bank and Indian Overseas Bank leading the losses. The country's commercial banks that have lent more than Rs 100 bn to microfinance institutions find themselves in a spot with micro lenders facing uncertain future in the face of greater scrutiny and regulatory restrictions. Public sector banks account for more than half of the total exposure. Banks lent more than Rs 80 bn to microfinance institutions in the last fiscal year alone according to a report by Nabard, the apex institution on economic and developmental activities in rural areas. A senior finance ministry official said that it was going to be the next big concern for public sector. Andhra Pradesh government had, on October 15, issued an ordinance that imposed interest rate restrictions and debt restructuring obligations on lenders, after a series of suicides blamed on coercive methods of micro lenders trying to recover their dues.