Wednesday December 12, 02:30 PM
Gaining strength? |
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By Equitymaster.com
Although still deep into the negative, the benchmark indices showed signs of recovery during the previous hour of trade. Currently, while heavyweights are reeling under selling pressure, select pharma and power stocks are trading firm. The overall market breadth is, however, positive with gainers outnumbering losers in the ratio of 1.9:1 on the NSE.
The BSE Sensex is trading at 20,247 (down 44 points) while the NSE Nifty is trading at 6,102 (up 5 points). The rupee is trading at 39.38 to the dollar.
Oil stocks are trading firm with IOC (up 4%), HPCL (1%) and BPCL (marginally up) being the key gainers. The largest supplier of diesel to Indian Railways, IOC has threatened to stop fuel supplies if the railway continues to insist on discounts on rates. IOC supplies 85% of the 2.4 m kilolitre (kl) diesel the railways need annually. In 2005, IOC, BPCL and HPCL offered discount of Rs 300 per kl over market price 2006 diesel sales, while RIL, offered a discount of Rs 1,104 per kl. Later, the state retailers agreed to offer a discount of Rs 1,125 per kl, but the railways awarded the contract for 14 railway consumer depots (RCD) belonging to public sector firms to RIL. Although RIL undertook diesel supply in 2006 for some of the RCDs awarded to it, later on after realizing that diesel marketing is not favourable due to negative margins, RIL unilaterally stopped diesel supplies and the state retailers were called in to fill in for RIL. For 2008, the state-retailers has not offered any discount and RIL have also not made any quotation. This removal of discount is done to counter the high global crude oil prices and rapidly increasing losses of the retailing segment.
Software stocks are trading weak with Infosys (down 4%), Satyam and Wipro (each down 2%) being the key losers. Departing from its earlier model of being a software services vendor, Wipro (WIPRd.BO, news) is looking to earn nearly one-sixth of its global IT revenues by FY09 from System Integration (SI) business. Although Wipro has been offering Systems integration services to sectors such as telecom for several years, its revenues from the practice have been relatively small. Systems Integration combined with infrastructure management offers a huge market opportunity and among the top-tier offshore vendors, Wipro is well poised to tap into the SI market after acquiring US-based Infocrossing for US$ 600 m in August 2007.
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