Metal stocks push markets lower

Tue, 12 Oct 09:30 am

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The Indian markets have started today's session on a negative note. The benchmark indices opened above the breakeven mark but soon moved into the negative territory. Other key Asian markets are in the red with South Korea (down 1.2%) leading the pack of losers. The US markets ended marginally higher yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading weak with metal majors facing the brunt of selling activity. The BSE-Sensex is trading lower by around 90 points, while the NSE-Nifty is weaker by around 30 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.1% and 0.3% respectively. The rupee is trading at 44.43 to the US dollar.

Engineering stocks have opened the day on a strong note. Gainers here include Alfa Laval and Suzlon. As per a leading business daily, Suzlon will seek the approval of its shareholders to increase its authorised share capital from Rs 4.5 bn to Rs 7 bn and to issue securities of up to Rs 50 bn. The company's board has already approved the proposal. It has also approved the increase of borrowing limits, other than temporary loans and working capital facilities, from Rs 70 bn to Rs 100 bn. Suzlon will soon seek a postal ballot of shareholders to get the final approvals. The board also approved the sale of 32 m shares of Suzlon Energy to IDFC Private Equity Fund in a no-cash transaction. It may be noted that the company had recently achieved financial closure of its debt refinancing of Rs 107 bn. This refinancing included a holiday of two years in principal repayments and removal of many debt covenants. It also successfully completed a rights issue of about Rs 12 bn which will go towards reduction of debt.

Energy stocks have opened the day on a strong note. Gainers here include Castrol and Indraprastha Gas. As per a leading business daily, ONGC is among the firms which will bid in Iraq's auction of gas fields later this month. The gas fields at located at Akkas in the western desert, Mansuriyah near the Iranian border, and Siba in Basra. The three fields together have estimated reserves of around 11.2 trillion cubic feet of gas. In all, thirteen companies have been qualified to bid for the auctions. It may be noted that the bidding round has been delayed twice to give companies more time to study contract terms.