Mid, smallcaps bear the brunt

Wed, 8 Dec Closing

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The benchmark Indian indices languished deep in the red throughout the session today. Declines were seen across the board with around 4 stocks declining for every one that advanced. The BSE Sensex closed lower by around 238 points (down 1.2%). The NSE Nifty was not spared either and lost around 73 points (down 1.2%). Selling pressure was much more evident in midcap and smallcap stocks. The BSE Midcap and BSE Smallcap indices were down 2.2% and 3.2% respectively. Consumer durables and realty stocks were the worst hit.

Asian indices closed mixed today while European indices opened in the green. The rupee was trading at Rs 45.12 to the dollar at the time of writing.

India Inc. is seen increasingly taking the inorganic growth route for its expansion plans. The value of M&A deals in November 2010 reached nearly US$ 5 bn. This is over three times over what it was last year. Utilities and consumer discretionary were the sectors which were the most targeted with deals worth US$ 1.4 bn and US$ 1.3 bn respectively in November. These two sectors accounted for 53% of total deal value during the month.

India's largest power producer NTPC has set aside a huge sum of money for its raising its capacity. It has earmarked a Rs 1,500 bn investment for sourcing equipment for its power projects in the next fiscal. Deliveries for the same will be over a 5 year period. These equipments are for the 75,000 MW capacity addition that NTPC plans to incorporate by 2017. Many global companies are set to bid for this massive project.

Electrical products maker, Havells India announced that it plans to double revenues from its cable and wire business to Rs 24 bn in the next three years. It invested Rs 1.2 bn in doubling the plant capacity of its cable and wire unit. It plans Rs 18 bn in revenues from this segment by FY12. But, the company stated that it will take around 2-3 years for it to reach full capacity utilisation. Havells also increased its plant area to 90 acres from 45 acres, and modernised its existing units.

With the new capacity in the offing, the company is expecting a significant push from the overseas exports. Currently, exports contribute upto Rs 500 m to the business.