Friday March 16, 04:00 PM
Bears strike again... |
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By Equitymaster.com
While the final trading hour was witness to buying at lower levels by investors, the indices nevertheless closed below breakeven. While selling was seen across the board, buying interest was witnessed in select pharma, energy and software stocks.
While e BSE Sensex closed at 12,408 (down 136 points) while the NSE Nifty closed at 3,604 (down 39 points). The rupee was trading at 44.11 to the dollar.
Weakness plagued the bourses in today's trading session. With the indices opening the day's proceedings on a weak note, selling pressure took its toll as the markets made deeper inroads into the negative territory with each successive trading hour. There was some sort of respite in the final trading hour as participants resorted to buying at lower levels. However, it was not enough to push the indices into the positive, leading to a close below yesterday's levels. The overall market breadth was negative with losers outnumbering gainers by a ratio of 4 to 1 on the Sensex. While Reliance Communication and L&T (each down 3%) led the pack of losers on the Sensex, Tata Motors (up 2%) and Ranbaxy (2%) managed to buck the trend.
Pharma stocks closed mixed. While Ranbaxy (up 2%) and Dr.Reddy's (1%) led the pack of gainers, Cipla (down 1%) closed into the red. As per a leading business daily, Sun Pharmaceuticals will shortly spin off its research and development (R&D) activities into a new company called Sun Pharma (SUN.BO, news) Advanced Research Company (SPARC). The transfer will include the company's New Chemical Entity (NCE) and New Drug Delivery System (NDDS) programmes. Sun Pharma is planning to invest US$ 60 m to US$ 65 m in the new research company in the next three years. However, research for generic drugs will remain with the main company. Sun Pharma's R&D expanses amounted to almost 12% of its sales in FY06. Generic research represented around two thirds of the company's total R&D spend, while discovery research accounted for the remaining one third. The demerger would lower pressure on margins as Sun Pharma's R&D costs are expected to lower by 35% to 40%, resulting into margin expansion. The stock closed marginally lower.
According to a leading business daily, L&T and its consortium partner Paul Wurth Italia have bagged a contract for the expansion of Vizag Steel plant of Rashtriya Ispat Nigam (RINL), worth Rs 14 bn. The company had invited bids for setting up a third blast furnace to double its capacity to 6.5 million tonnes per annum (MTPA). L&T shall be constructing a blast furnace with a capacity of 2.5 MTPA. L&T's scope of work includes complete detailed engineering, manufacturing and supply of equipment to RINL. It will also be responsible for site services, which will include civil and structure work and setting up of the equipment. Paul Wurth will provide specialized supervision. L&T's contract value in this project is around Rs 8.1 bn. At the end of December 2006, the engineering and construction segment's order backlog stood at 341 bn, almost 2.9 times the segment's full year sales in FY06. The current order is expected to further swell the company's robust order book. The stock, along with its peer BHEL (BHEL.BO, news) , closed 3% lower.
Auto stocks closed a mixed bag. While Tata Motors (up 3%) and Punjab Tractors (up marginally) found favour, Hero Honda (HROH.BO, news) (down 2%) closed weak. As per a leading business daily, Bajaj Auto (BJAT.BO, news) is preparing to unveil a new brand strategy signaling the emergence of a 'new' company. Slated for a May launch, this new positioning will allow the automaker to build separate brands around its different segments of products. The company has also factored in its commercial vehicle business in its new branding charter. This segmentation is expected to create separate identities for its mid and high-end motorcycles and commercial vehicle businesses. The move is quite similar to the model followed by international auto majors like Toyota and Volkswagen, and is aimed at creating a simple positioning platform for different category vehicles. The stock is marginally lower.
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