Auto stocks sole losers

Tue, 5 Jan 01:30 pm

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The markets pared some of their earlier gains on account of minor profit booking activity witnessed during the previous two hours of trade. Stocks across sectors are witnessing a field day with those from the metal and banking sectors leading the pack of gainers. However, most stocks from the auto sector are witnessing declines.

The BSE-Sensex and NSE-Nifty indices are trading higher, up by 105 points and 40 points respectively. The BSE-Midcap and BSE-Smallcap indices are also trading higher, up by 1.3% and 0.9% respectively. The rupee is trading at 46.10 to the dollar.

According to a leading business daily, Bharat Forge, a leading forging company is planning to invest Rs 12-15 bn in non-automotive sector businesses over the next 3 to 4 years. The company which primarily caters to the automotive industry wants to expand in the non-auto sectors like aerospace, marine and nuclear power plants. It invested around Rs 4 bn in non-auto businesses in last two years. The future projected investment is expected to be towards manufacturing forgings of upto 500 tonnes for large nuclear and other power plants. It may be noted that the company currently manufactures forgings to the tune of 40-50 tonnes and generates around 22% of its sales from non-auto sectors. It aims to achieve 40% of its topline from non-auto sector by 2012.

In order to expand in the desired segments, the company had already developed facility at Pune and Baramati. The future investment will go to these two facilities along with a facility at Mundra. The company will make subcritical and supercritical power plant equipment at Mundra facility under a JV with Alstom. We believe this move will help the company in long run in tapping the growing demand in India for heavy industry components. Indian markets are highly dependent on imports for critical components on account of lack of technology and domestic capacity.

Pharma major Cadila Healthcare is planning to launch its H1N1 vaccine in India by April 2010. The company yesterday commenced the clinical trials of its vaccine after it received a go ahead signal from Drug Controller General of India (DCGI) for conducting clinical trials on humans. With this, Cadila Healthcare has overtaken many other pharma and biotech companies in getting approvals for conducting clinical trials for this H1N1 vaccine. The company plans to conduct the clinical trials in 10 centres in Ahmedabad, Bangalore, Pune and Jaipur. The company expects to complete the trials by end of March 2010, after which the study results will be sent to DCGI for approval. It expects DCGI approval by April 2010 and will be ready to launch the vaccine in the same month. To start off with, the company will be ready with the infrastructure to produce 6 m dosages, which it plans to double by the end of the FY10. As per reports, the market for this is expected to cross US$ 7 bn by 2011. The stock of Cadila Healthcare is currently trading higher on the bourses.