Small caps in the limelight

Mon, 3 Jan 01:30 pm

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Indian indices continued to trade firmly in the green during the previous two hours on the back of strong buying in heavyweights. Currently, stocks from the metal, realty and consumer durable space are leading the gains. However, stocks from the IT space are trading flat.

Currently, the BSE-Sensex is trading up by around 103 points, while the NSE-Nifty is up by about 33 points. There has been firm buying interest amongst the mid and small cap stocks as well with the BSE Midcap and BSE Small cap indices trading higher by 1.09% and 1.71% respectively. The rupee is trading at 44.74 to the US dollar.

Banking stocks are currently trading firm led by Federal Bank, HDFC Bank and Bank of India. A leading business daily has reported that India’s largest bank SBI is looking at expanding its overseas presence. For the same, the bank is looking at setting up operations in South Korea, Sao Paulo and Botswana sometime this year. It is believed that the company is planning to open up a representative office in Sao Paulo (Brazil) and a full service branch in South Korea. At Botswana, the plans are to set up a subsidiary. As of now the bank is believed to have 151 offices across 32 countries. These include the US, UK, Singapore, Canada and Mauritius. About 16% of the bank’s total business is contributed by its overseas operations. Over the last two years, the bank has been quite aggressive in expanding its international business. For instance, the bank increased its foreign offices by more than 50% in FY10 to 142. In a move to expand its operations in Southeast Asia, SBI is believed to be on a lookout for acquiring a bank in Indonesia in cash deal not exceeding US$ 100 m (Rs 4.5 bn).

Power stocks are trading firm with GVK Power & Infra and Jaiprakash Power leading the gainers. Tata Power has terminated an agreement to raise US$ 300 mn (about Rs 13.5 bn) through selling 14-15% stake in its two coal SPVs to the private equity firm Olympus Capital Holdings Asia. In June last year, the company had entered into an agreement to sell 14-15% stake in its special purpose vehicles Bhira Investments Limited and Bhivpuri Investments Limited, through issue of shares with differential rights to Olympus Capital. The private sector power major has reported that the investment was subject to completion of certain conditions precedent, as specified in the Investment Agreement. Since the conditions were not fulfilled in due time the company and both of its coal SPVs exercised their rights and terminated the deal.