Carrying on with last week's sell-off, the Asian markets have opened this week in the red as well, led by weakness in the benchmark indices of China, Hong Kong, and Singapore. As for the Indian markets, these have opened in the positive today. Pharma and IT stocks are leading the gains currently.
The BSE-Sensex is trading higher by around 40 points (0.2%), while the NSE-Nifty is up about 10 points (0.2%). Mid and small cap stocks are however trading marginally in the negative, with the BSE-Midcap and BSE-Smallcap indices down by 0.6% and 0.1% respectively. The rupee is trading at 45.80 to the US dollar.
The stock of Coal India is trading marginally in the red currently. As per a leading business daily, the company is looking to close down its loss-making underground mines with a view to protect its profitability. As per the company's management, it will initially target mines that are losing Rs 3,000 and above per tonne of coal extracted. There are around 30-40 of such mines that Coal India operates, out of its total 120-130 loss-making mines. This count has however come down post the upward revision in coal prices. As per reports, underground mines currently form just around 10% of India's annual coal production, and the same (production) has been stagnant from these mines for the past many years. In terms of overall profitability, Coal India currently earns operating and net margins of around 22% and 20% respectively. The average for the past five years has been 19% and 16% respectively.
Shipping stocks, with the exception of Shipping Corp. (SCI) have opened on a weak note. GE Shipping and Varun Shipping are leading the losers' pack. The follow-on public offer (FPO) of India's largest public sector shipping company, SCI, opens tomorrow. The FPO has been priced at Rs 135-140 per share (excluding a 5% discount for retail bidders) and the company plans to raise Rs 11.5 bn (approx. US$ 255 m) from the same. Half of this money will flow to the Indian government for its 10% stake sale, while the remaining half will flow to SCI for a 10% fresh issue of shares. The company is looking to use these funds for acquisition of nine vessels, of which it will place orders for two very large crude carriers and three containers soon. SCI currently has 26 vessels on order, and these are expected to be delivered between 2011 and 2013.