Tuesday June 5, 03:30 PM
Rangebound day of trade... |
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By Equitymaster.com
The markets traded largely in a range in the final trading hour and managed to close above breakeven. While power, steel and telecom stocks displayed strength, selling pressure took its toll on select software, FMCG, pharma and energy stocks. As regards global markets, while the Asian indices closed a mixed bag, the European indices are also witnessing a mixed trend currently.
The BSE Sensex closed at 14,535 (up 39 points) while the NSE Nifty closed at 4,285 (up 18 points). The rupee was trading at 40.52 to the dollar.
With the weakness seen on the bourses in the latter half of yesterday's session spilling over to today's session, the morning session was witness to the indices trading largely into the red. However, post noon, buying activity at the lower levels pushed the indices into the positive territory. From thereon, trading was largely rangebound and the final trading hour saw the indices close above yesterday's levels. The overall market breadth was positive with gainers outnumbering losers by a ratio of 1.5 to 1 on the Sensex today. While Suzlon Energy and Reliance (RELI.BO, news) Petroleum (up 5% each) emerged as the top gainers on the Nifty, HPCL (down 3%) and BPCL (2%) closed weak.
Engineering stocks closed a mixed bag today. While Punj Lloyd (up 9%) and Suzlon Energy (5%) found favour, L&T and ABB (down 1% each) closed into the red. As per a leading business daily, Suzlon Energy, a wind-turbine maker, is planning to borrow US$ 1.75 bn to fund acquisition of 25% stake in Germany's Repower Systems. India's biggest wind-turbine maker last month won a bidding war against France's Areva 25% stake with an offer that valued Repower at US $1.6 bn. Governments worldwide are turning to wind power for their energy needs to cut carbon emissions and reduce dependence on coal and crude oil. Post the acquisition of REpower, Suzlon's share of the global wind power market will go up to a little over 14%, from the existing 11% level and the company will also get a foothold globally besides an entry into the offshore market for wind turbines.
Telecom stocks closed firm with VSNL (up 4%), MTNL (2%) and Idea Cellular (1%) being the key gainers. As many as 9 investors are currently in talks with RCOM, the country's second-largest wireless service provider, for picking up a minority stake in its telecom infrastructure business. RCOM is currently in the process of spinning off its telecom infrastructure into a separate company named Reliance Telecom Infrastructure Limited (RTIL). The deal could be in the range of US$1 bn for a minority 26% stake in the telecom major's tower business, pegging the valuation of the tower company at US$ 4 bn. Reliance Communication currently owns over 14,000 towers, and is in the process of adding another 20,000 in FY08. The stock closed marginally higher.
Tata Tea (TTTE.BO, news) has made an open offer to purchase an additional 20% stake in Mount Everest Mineral Water (MEMW) for Rs 952 m. The Tata group firm will acquire up to 6.8 m equity shares at a price of Rs 140 each, to be funded through internal accruals. Tata Tea had earlier agreed to buy 25.7% in Mount Everest for Rs 1,150 m through subscription of preferential shares from promoters of MEMW. Tata Tea would subscribe MEMW's 5.1 m equity shares, constituting 15% of the paid-up capital, on preferential basis. It would also acquire 3.1 m equity shares - 10.8% equity - held by Foresight Holdings Pvt Ltd, promoter Vinod Sethi and MEMW Managing Director Salim Govani. Along with the open offer and the share purchase agreement, the total acquisition price to be paid by Tata Tea would be around Rs 2.1 bn. The company would be responsible for appointing a new management team for day-to-day operations of Mount Everest. The stock closed 2% lower. As regards its peers, while ITC (down 2%) also closed weak, Britannia (up 2%) closed into the positive.
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