Markets open strong on budget day

Fri, 26 Feb 09:30 am

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The Indian markets have started today's session on a positive note. The benchmark indices opened above the breakeven mark and have managed to move further into the positive territory since then. Other key Asian markets are trading a mixed bag with Hong Kong (up 1%) leading the pack of gainers. The US markets closed lower by 0.5% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading a mixed bag with banking and energy stocks attracting buying interest. However, select software stocks are in the red. The BSE-Sensex is trading higher by around 70 points, while the NSE-Nifty is up by about 25 points. Buying interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.3% respectively. The rupee is trading at 46.31 to the US dollar.

Auto stocks have opened the day on a mixed note. Gainers here include Ashok Leyland and Bajaj Auto. However, Tata Motors is trading in the red. As per a leading business daily, Tata Motors has obtained a £340 m (approx. Rs 24 bn) loan facility for its luxury brands Jaguar Land Rover (JLR) from European investment banks. The eight-year loan is meant to finance the development of micro and full hybrid vehicles as well as research into more energy-efficient premium cars, leading to lower CO2 emissions. The loan has guarantee supports from international banks as well as Indian banks such as SBI and Bank of Baroda. Interestingly, Tata Motors had first approached the UK government for the guarantee support. The talks broke down as the UK government laid down tough conditions for the support. It may be noted that ever since the crisis broke out and sales of luxury vehicles plummeted, the management of JLR has been trying hard to keep the company afloat and resort to strong cost cutting measures like laying-off excess workforce. Hence, the completion of this loan facility will help Tata Motors to create enough value out of JLR in order to justify the price it paid for it.

Pharma stocks have opened the day on a negative note. Losers here include Ranbaxy and Panacea Biotech. Ranbaxy announced its CY09 results yesterday. Revenues grew by 2.5% YoY during the year led by India and the emerging markets and launch of 2 first-to-file (FTF) products in the US. Several cost rationalization measures lead to an improvement in operating margins by 1.5% to 9.4% during the year. With interest costs falling substantially and the company recording forex gains of Rs 3.4 bn as against forex losses of Rs 18.5 bn in CY08, it posted a net profit of Rs 3.1 bn during the year as against a loss of Rs 9.3 bn in CY08.