Persistent buying activity among the index heavyweights helped Indian bourses maintain the opening gains they witnessed today. Currently, stocks from the auto, metal, banking, capital goods and consumer durables are leading the pack of gainers, while realty stocks are the only ones failing to garner investors' interest.
The BSE-Sensex is trading firm, up by around 249 points, while the NSE-Nifty is up by around 68 points. The BSE-Midcap and BSE-Smallcap are also trading firm, up by around 1.8% each. The rupee is trading at 46.02 to the dollar.
Reliance Industries (RIL) seems to be finding investors’ favour today. According to a leading business daily, the company is likely to fail in getting through with its multi-billion bid for the bankrupt petrochemical company LyondellBasell. It may be noted that the latter’s valuations are climbing up lately on the back economic recovery. RIL had already sweetened its bid by 21% to US$ 14.5 bn from the initial amount of US$ 12 bn. However, at current valuations, the bid is considered highly expensive and a group of US based creditors are expected to reject the offer. We believe that this appears to be a better option for the company as the exorbitant valuations should be justified by extremely strong fundamentals. Moreover, RIL is likely to concentrate on smaller acquisitions like Canada’s Value Creation for US$ 2 bn if its LyondellBasell deal falls apart.
As per an announcement on BSE, FMCG major, Marico appears to be optimistic with the Union Budget 2010. The company believes that the impact of increase in MAT to 18% will get nullified by the decrease in corporate tax surcharge. However, the increase in excise duty, particularly on petrol and diesel will increase the cost base. While the inclusion of more services under service tax gamut will push the cost, the retention of service tax at 10% is a favourable move. The company’s skin care services division is likely to be benefitted by this. On a broader level, the measures announced in favour of the ‘aam aadmi’ are likely to increase the disposable income of the public. The company expects this to result in mildly positive impact on consumer demand.