India reflects choppy Asia

Tue, 19 Jan 09:30 am

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The Indian markets have started today on an uncertain note. Taking cues from the Asian markets, benchmark indices here have struggled to cross the breakeven mark. Asia is currently trading a mixed bag with Indonesia (up 0.4%) leading the pack of gainers. The US markets remained closed yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading a mixed bag with metal and power stocks witnessing buyers' interest. However, select auto and banking heavyweights are in the red. The BSE-Sensex is trading higher by around 15 points, while the NSE-Nifty is flat. However, buying interest is being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.7% and 0.8% respectively. The rupee is trading at 45.64 to the US dollar.

Energy stocks have opened the day on a mixed note. Gainers here include Gujarat Gas and Castrol. However, ONGC is in the red. GAIL announced its 3QFY10 results yesterday. The company reported a topline growth of 6.7% YoY during 3QFY10 on the back of a 45% YoY growth in the natural gas transmission business. Sales from the petrochemicals segment grew by 29% YoY, while LPG & liquid hydrocarbon segment grew 113% YoY. EBITDA margin expanded to 20.7% during the quarter from 4.6% in 3QFY09 on the back of lower raw material costs. Petrochemicals gross margins expanded from 27% in 3QFY09 to 48% this quarter. Natural gas transmission margins increased by 8%. Other income recorded a decline of 45% YoY during the period. Bottomline zoomed by 239% YoY during 3QFY10 due to the strong recovery in operating margins.

Steel stocks have opened the day on a strong note. Gainers here include Tata Steel and SAIL. As per a leading business daily, Tata Steel along with South Africa's Sasol Synfuel International has proposed to set up India's first project to convert coal into liquid in Orissa. The 3.6 m tonnes per annum project will require an investment of Rs 450 bn. Coal for the project would be procured form Srirampur area in Talcher district. The project is slated to commission in 2018 and will produce 80,000 barrels of liquid fuel per day. In our view the crucial issue will be land acquisition. The project requires 3,000 acres of land. It may be noted that two other mega investments in the state - steel plants by ArcelorMittal and Posco - have already been plagued by land acquisition issues.