Markets fight back after weak start

Mon, 8 Feb 09:30 am

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The Indian markets have started today's session on a weak note. The benchmark indices opened way below the breakeven mark but have managed to make a significant upward movement since then. Other key Asian markets are trading in the red with Indonesia (down 2.1%) leading the pack of losers. The US markets closed higher by 0.1% last Friday.

Currently in India, heavyweights from the BSE-Sensex are trading a mixed bag with construction and auto stocks witnessing buyers' interest. However, software and banking heavyweights are in the red. The BSE-Sensex is trading lower by around 40 points, while the NSE-Nifty is down by about 10 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.5% and 0.9% respectively. The rupee is trading at 46.75 to the US dollar.

Power generation stocks have opened the day on a weak note. Losers here include Tata Power and NTPC. As per a leading business daily, power generation giant NTPC plans to begin work on the 500 MW imported coal-based power project in Sri Lanka by the end of this month. The joint venture between Ceylon Electricity Board (CEB) and NTPC is currently awaiting the opinion of Sri Lanka's attorney general. Coal will be imported from Indonesia or South Africa. The CEB and NTPC will have an equal stake in the joint venture. The project will be funded with a debt to equity ratio of 70:30. NTPC is also looking at acquiring coal mines in Australia, Indonesia, Mozambique and South Africa. In our view, NTPC's overseas foray is part of its aggressive expansion plans across the power generation value chain. It may be noted that it is diversifying into such areas as captive coal mining, LNG, manufacture of transformers and electrical works, power transmission and distribution, and even hydropower.

Pharma stocks have opened the day on a mixed note. Gainers here include IPCA Labs and Indoco Remedies. However, Sun Pharma is in the red. As per a leading business daily, Lupin is moving away from its traditional position of being a low-cost antibiotics maker focused on the domestic market for tuberculosis drugs. Having witnessed other pharma companies cater to the chronic diseases segment , the company is now making amends. In 2009, Lupin filed 28 abbreviated new drug applications (ANDAs) in the US, and expects to file 35 this year. It is also investing in its intellectual property division and acquiring new assets in Latin America. In our opinion, while the US generics business is expected to gain momentum going forward, the impact of pricing erosion is likely to continue. As such, Lupin might not be able to replicate the success story of other Indian pharma majors who got into the generics business much earlier.