Wednesday April 11, 03:30 PM
Waiting in the sidelines... |
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By Equitymaster.com
Selling pressure amongst index heavyweights dragged the Sensex into the negative territory during the final hour of trade. The Nifty though, managed to close above break even with advance to decline ratio ending in the favour of former, as 24 of the Nifty stocks ended in the red. While the buying interest was seen in engineering, energy and select auto stocks, selling pressure continued in software, cement and select banking stocks.
The BSE Sensex closed at 13,184 (down 5 points) while the NSE Nifty closed at 3,863 (up 15 points). The rupee was trading at 42.84 to the dollar.
Today's trading session was marked by significantly higher volatility on the Sensex. After a firm opening during the first hour of trade, the index showed signs of weakness and lost all its gains by the time it was afternoon. However, subsequent buying interest amongst market participants pulled the Sensex back into the positive territory and just as it was being felt that bulls would once again prevail, selling pressure resurfaced in the final hour taking the Sensex back into the negative territory. Nifty on the other hand, remained rather steady throughout the day. Trends in the broader NSE were also positive with advances outnumbering declines in the ratio of 1.5:1. Asian markets ended the day's proceedings on a mixed note, while the European markets have opened on a firm note.
According to a leading business daily, Jet Airways has entered into an agreement to acquire Air Sahara. Under the new agreement, Jet would be paying Air Sahara Rs 14 bn for the acquisition. This excludes the Rs 1.8 bn that Jet spent for running Air Sahara for three months, the Rs 5 bn paid against shares pledged by Air Sahara and a creditor's deduction of around Rs 2.7 bn. So, given that Jet has already expended this Rs 9.5 bn (and lost potential interest earnings on the amount, apart from the opportunity cost), the present valuation of Air Sahara works to around Rs 23 bn, which is more or less what Jet had bid for in the first place (US$ 500 m in January 2006). The deal is not a positive for Jet as it is expensive and will affect the margins of the company given the fact that Sahara has lower margins. The stock ended 6% lower, while its peer Deccan Aviation ended firm (up 3%).
According to a leading business daily, Marico, leader in the Rs 5 bn plus branded coconut hair oil market, with over 50% share (Parachute), may see its margins contract on account of rising copra (key input) prices. Presently, the company faces pressures on account of rising input costs that already were 54% of its revenues for the December 2006 quarter. Also, its ongoing brand building exercise, which is accompanied by increased advertising expenditure, is likely to further intensify the pressure on its margins. However, the company is looking at robust growth from it franchise business (Kaya skin care clinics) that had accounted for a 36% YoY increase in its topline for 3QFY07. The stock is currently trading marginally higher. Stocks from the FMCG sector ended mixed bag with Colgate (up 3%) and Godrej Consumers and Dabur (up 1% each) being the major gainers. On the other hand, Gillette and HLL (down 1% each) were amongst the major losers.
The Ministry Of Petroleum and Natural Gas is not planning to raise the prices of petrol and diesel in the near future even as the price of the Indian basket of crude oil continues to remain above US$ 65 a barrel. Prices will not be hiked even if the global crude oil crosses US$ 70 a barrel. The high prices of Indian crude basket - the average price in March was US$ 60.3 a barrel compared to US$ 56.5 in February - has resulted in the state-owned oil marketing companies losing close to Rs 1.20 bn a day from retail sales. This has resulted in the industry calling for a hike in retail prices of petrol and diesel. However, with the ongoing elections in some states, the government seems to be unwilling to risk its vote bank as a result of soaring inflation. Energy stocks ended mixed with major gainers being ONGC (up 1%) and Gujarat Gas (up 1%). Oil marketing companies viz. BPCL (3%), HPCL (2%) and IOC (1%) ended weak.
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