Lacklustre start to the week

Mon, 13 Dec 09:30 am

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Asian markets have opened this week on a positive note. China and Hong Kong are leading the pack with gains of 1.1% and 0.7% respectively. As for the Indian markets, these have opened on a cautious yet positive note. Metal and auto stocks are leading the gains currently. IT and telecom stocks are however trading with marginal losses.

The BSE-Sensex is trading higher by around 15 points (0.1%), while the NSE-Nifty is down about 5 points (0.1%). Mid and small cap stocks are trading stronger, with the BSE-Midcap and BSE-Smallcap indices up by 1% apiece. The rupee is trading at 45.15 to the US dollar.

Steel stocks have opened strong today. SAIL and Tata Steel are leading the gainers' pack currently. A leading business daily has reported that domestic steel prices are expected to remain on an upswing in the near term. This is given that the cost of key inputs like iron ore, scrap and coking coal are increasing, and companies would need to raise product prices to ward off pressure from their margins. While these input prices are higher as compared to last year, steel prices haven't moved much. In the longer term, with rising demand from infrastructure industries, https://www.equitymaster.com/research-it/sector-info/steel/ . However it is the near term pressure on margins that's keeping the steel companies bothered. There are expectations that companies are looking to raise prices by around Rs 1,500 per tonne starting January 2011.

Domestic pharma stocks are also trading with gains currently. Elder Pharma, Cadila Healthcare, and Biocon are leading the gains. As reported by a leading business daily, Sun Pharma is looking to spend US$ 300 m for acquiring a company in the US, which is by far the largest market for generic companies. The company has already built up a cash war chest of US$ 700 m, a part of which will go towards funding this acquisition. The company has been known for its inorganic growth strategy, given that it has acquired almost 16 companies over the past 14 years of its existence. The latest to come into its fold, and after a long fought battle, was Israel based Taro. Post the acquisition of Taro, the US contributes to more than 50% of Sun Pharma's total sales. While the contribution from India stands at around 30%, 14% comes from other markets like Europe, Russia and South America.