Late buying fuels Indian indices

Mon, 16 Jan Closing

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Indian stock markets languished in the red for the larger part of the day today. However, buying activity at lower levels intensified in the late afternoon session and pushed the indices into the positive. This momentum was maintained in the final trading hour as well and the Indian stock market indices closed above the dotted line. While the BSE-Sensex closed higher by around 35 points (up 0.2%), the NSE-Nifty closed higher by around 8 points (up 0.2%). The BSE Mid cap closed flat, while the BSE Small cap closed marginally into the positive. While gains were largely seen in IT and FMCG stocks, healthcare and Oil and gas indices closed into the red.

As regards global markets, most Asian indices closed into the red today while most European indices have opened weak. The rupee was trading at Rs 51.46 to the dollar at the time of writing.

As per a leading business daily, metals major National Aluminium Company Ltd. (NALCO) is set to finalise a deal with a miner, possibly with the Muara Enim mine in Indonesia for supply of coal to its US$ 3.8 bn aluminium-cum-power project in Indonesia. This project entails setting up a 5 m tonnes per annum (MTPA) aluminium smelter and a 1,250-MW power plant in Indonesia. Five coal miners had responded to Nalco's bid and two of them had fulfilled the criteria. Funding is not a problem for Nalco given that the company has cash balance of Rs 45 bn with no debt. The Indonesia project will be managed through a special purpose vehicle (SPV), in which Nalco will have a controlling stake.

Nalco's investment would be 15% of the total project cost, while the JV partners would fund 15% and the remaining 70% would come through loans. The project would be developed in around 4 years. It must be noted that Nalco has outlined investments of around 579 bn by 2020 which will be for expansion. This includes the setting up of two large aluminium smelters in India and abroad. The stock, along with its peer Hindustan Aluminium Company (Hindalco), closed lower today.

Auto stocks closed mixed today. While Tata Motors and Maruti Suzuki found favour, Bajaj Auto and TVS Motors were at the receiving end. Jaguar Land Rover (JLR), which was bought by Tata Motors in 2008 from Ford Motor Company, plans to invest aggressively in new products and technology over the next 3-5 years. This is despite the fact that growth in the developed countries especially Europe has slowed down. It must be noted that in 2QFY12, Tata Motors' consolidated revenues grew by 27% YoY and this was largely attributed to the healthy growth in JLR's revenues (up 34% YoY). Global wholesale volumes for JLR during the quarter witnessed a growth of 23% YoY. While Jaguar volumes decreased by 7% YoY, Land Rover volumes increased by 34% YoY. Growth was largely led by China. Going forward, JLR is banking on growth from emerging markets such as India, China, South America and Russia with products such as Range Rover Evoque, Sport, Discovery and XJ. Further, while recovery in its traditional markets such as UK, North America and Europe will certainly fuel volumes, challenges will mount if the slowdown continues through 2012.