Thursday April 5, 03:30 PM
Firm close yet again... |
|
By Equitymaster.com
Despite markets losing some of its gains during the final hour of trade, the indices have managed to close into the positive territory on the final day of this week's trade. The advance to decline ratio ended in the favour of the former with only 17 of the Nifty stocks ending in the red. Amongst sectors, buying was witnessed in banking, cement, energy, engineering and FMCG stocks, while weakness was witnessed in software, telecom and aluminium stocks.
The BSE Sensex closed at 12,856 (up 69 points) while the NSE Nifty closed at 3,752 (up 19 points). The rupee was trading at 43.14 to the dollar.
In a week of heightened activity, markets managed to close into the positive territory for the third consecutive day of trade. With gains in the last 3 sessions, Monday's bear carnage was negated to a larger extent. Proceedings for the day started on a weaker note with markets slipping into the negative territory during early hour of trade. Subsequently, buying in the index heavyweights by the market participants pulled the benchmark indices above break even. The Asian markets ended the day's proceedings on a weaker note. The European markets have also opened weak.
HLL's 100% subsidiary, Unilever India Exports (UIEL) has reached an agreement to sell Sangam to Wadhawan Food Retail (WFRL) with effect from March 31, 2007. The value of the deal has not been disclosed. Sangam, a non-store home delivery retail business, was started in 2001 to experiment with the direct-to-consumer channel combining the twin benefits of convenience and value. The idea was to test market it in Mumbai under the brand Sangam Direct before taking a decision to extend it across the country. The decision for a larger roll-out was put on hold in the context of the evolving retail scenario in the country. The increasing competition in this segment was making it difficult to capture more market share. HLL in recent times is also exiting from segments, which are not performing as expected. The move to sell Sangam is also a part of HLL's strategy to focus on its core business. The stock ended on a firm note (up 1%) along with its peer Dabur (up 2%).
The Planning Commission has asked the Ministry of Petroleum and Natural Gas to limit the refining capacity additions because the domestic market is saturated and the infrastructure to export petroleum products is not yet well established. There could be saturation in the export markets too. Moreover, once the domestic gas comes in, there is bound to be some displacement of liquid fuels like petrol, diesel and LPG. This warning from the planning body could, therefore, impact PSU more than private players as private sector entrepreneurs do not need a licence to set up new refineries and the government-owned companies need to get their plans cleared by the Cabinet. According to estimates by 2012, India's refining capacity will go up to 241 mmtpa. Most of the new capacity is targeted at the export market. Energy stocks ended the day's trade on a firm note with BPCL and IOC (up 1% each) and HPCL (up 2%) registering gains.
According to a leading business daily, the market for value added services (VAS) has risen significantly over the past five years to touch a size of Rs 28 bn at the end of 2006. While the share of VAS as a percentage of total revenues for most telecom companies is low (about 10% for the market leader Bharti Airtel) the same is expected to go up in the years to come. As reported, the VAS industry is expected to grow by 60% YoY in the current year to reach the size of about Rs 45 bn by the end of December 2007. This will benefit the cellular companies as they are the provider of last mile connectivity for content providers and hence corner a large share of revenues generated from such offerings. In fact, for every Rs 100 spent by a subscriber on VAS, only Rs 30 goes to the content provider with the rest being retained by the cellular operator. However, owing to their relative low share in service providers' mobile revenues, we do not expect these to contribute meaningfully to the companies' ARPUs, which have witnessed a declining trend on the back of reduced tariffs. Telecom stocks ended the day's proceedings on a cautious note with Bharti Airtel and Reliance (RELI.BO, news) Communication losing 1% each, while VSNL ended marginally into the negative.
|
