Banks, healthcare drag markets down

Thu, 21 Jan 11:30 am

   Previous Close   

   Pre-Open   

   09:30 am   

   01:30 pm   

   02:30 pm   

   Closing   

After witnessing a weak start, the Indian stock markets slid deeper into the negative territory during the previous two hours of trade. The markets witneseed weak sentiments on account of persistent selling in banking, consumer durables, healthcare and capital goods stocks. However, stocks from the IT, telecom, auto and realty sectors are finding favour.

The BSE Sensex and NSE Nifty are trading in the red, down by 90 points and 25 points respectively. Midcap and small cap stocks are also trading in the negative, down by 0.32% and 0.04% respectively. The rupee is trading at 46.03 to the dollar.

As per a leading business daily, Yes Bank, is planning to raise around US$ 150-200 m through a Qualified Institutional Placement (QIP) before the end of this fiscal. The bank is also considering raising Rs 750-800 m through another perpetual issuance by March 2010. These fund raising initiatives are aimed at garnering a total capital base of more than Rs 50 bn by the beginning of next fiscal. This is expected to aid the bank in strengthening its balance sheet and do more business with existing and new customers. It may be noted that the bank amassed Rs 3 bn from the recent fund-raising issue. The bank is looking to enter new businesses and is eyeing opportunities in the electronic broking, alternate asset management and mutual funds business. The bank is planning to start 2 new businesses this calendar year.

Praj Industries declared its 3QFY10 results today. The company's sales fell by 29% YoY during 3QFY10, 16% YoY in 9mFY10. Its operating margins improved by 0.8% YoY during the quarter, largely on account of lower raw material and other expenditure (both as percentage of sales). Net profits fell by 38% YoY during the quarter, primarily due to a significant fall in other income as well as a higher effective tax rate. It may be noted that Praj is planning to get into the customized engineering business in areas other than ethanol production. Within this the company is looking to manufacture specialised equipment for segments like oil & gas, petrochemicals, chemicals, water treatment, as also fermentation equipment for pharma, biotech and other industries etc. Its capital expenditure for the current financial year (FY10) is slated to be about Rs 300 m, and includes the amount it intends to spend on the above initiatives. We believe that the company's new ventures will have a strong impact on its future profitability.