Paring losses...

Markets pared further losses during the penultimate hour of trading as selective buying emerged among index heavyweights. Selling, however, continues in stocks from the auto, banking, commodity and software sectors. Despite the improved performance in the previous hour, the overall mood remains sullen.

The BSE Sensex is trading at 6,577 (down 27 points) and the Nifty is trading at 2,058 (down 5 points). The rupee is trading at Rs 43.80 per US Dollar.

After gaining in yesterday's trades on reports that around 2% of global shipping capacity is due for scrapping thus likely to result into higher freight rates, shipping stocks are trading lower today. Major losers include Bharati Shipyard, G.E. Shipping and Essar Shipping (each 2% down). These losses are seemingly a result of reports in today's business dailies that shipping companies will not be able to claim tonnage tax benefits on revenues from selling ships. It must be noted that, earlier, these companies could claim benefits under Section 33-AC of the I-T Act, only if the income from sale of ships was utilised for acquiring new capacity within a year. This latest notification from the government should, however, not bother large shipping companies like G.E. Shipping much, as income from sale of ships does not form a major chunk of their total revenues.

Power stocks, with the exception of Neyveli Lignite (up 1%), are trading weak currently. Major losers here include PTC (2%), Tata Power (TTPW.BO, news) (2%) and Reliance (RELI.BO, news) Energy (1%). Gains in Neyveli Lignite are seemingly a result of the company's yesterday's reporting of a strong performance in FY05. For the fiscal, lignite production (growth of 5% YoY), power generation (2% YoY) and export of power (2% YoY) have all crossed the targeted limits. Importantly, during the fiscal, the government of India conferred the status of a 'Mini-Ratna' to the company. With the restructuring of state electricity board in Tamil Nadu and other three neighbouring states to which the company sells power, unlike the past, the recovery rate of dues has improved considerably. Also, as reported earlier, the government has sanctioned a 2.1 MTPA lignite-mine and a 250 MW power station for the company at a capex of Rs 13.7 bn. We believe that this will be a good growth kicker in the long term for Neyveli Lignite.

Email this article to your friend -  View most popular