Profit-booking takes its toll

Mon, 5 Mar Closing

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Indian stock markets had a weak outing today as sentiment was mainly negative throughout today's session. Indices opened in the red and continued to trade below the dotted line on profit-booking in index heavyweights. It seems that investors are choosing to play it safe ahead of key announcements next week. Next week will see the announcement of the Union Budget as well as the monetary policy of the Reserve Bank of India (RBI).

While the BSE-Sensex closed lower by around 274 points (down 1.6%), the NSE-Nifty closed lower by around 79 points. The BSE Mid Cap and the BSE Small Cap were, however, at the receiving end and closed marginally lower. With respect to sectoral indices, only FMCG stocks closed in the positive while realty and metal stocks racked up the losses.

As regards global markets, Asian indices closed weak today while European indices have also opened in the red. The rupee was trading at Rs 49.83 to the dollar at the time of writing.

Adani Enterprises has signed five separate agreements for supplying 4 million tonnes (MT) of imported coal to public sector power generator NTPC. This coal will be supplied to NTPC's fourteen power stations and will be imported from global sources in the period between March-June 2012. The company will supply 1 MT of imported coal to NTPC's Talcher power stations, 1 MT for Farakka and Kahalgaon, 0.5 MT for Simhadri and Ramagundam, 0.8 MT for Dadri, Rihand, Singrauli, Tanda, Unchchar and Vindhyachal and 0.7 MT for Korba and Sipat power stations. This imported coal is required to meet the coal blending requirements of NTPC.

Adani is India's largest coal importer and has most state-run power utilities as its customers. The company is developing and operating mines in India, Indonesia and Australia. It imports and trades coal from other countries as well. The company is expected to mine 200 MT of coal per year in 2020, making it one of the largest mining groups in the world. NTPC, India's largest power generator has an aggressive capacity addition plan for the twelfth five-year plan (2012-17). It plans to add around 32,000 MW of new generation capacity. Fuel supply agreements such as this are necessary for it to meet its aggressive targets.

The private equity (PE) arm of the world's biggest luxury products group, Louis Vuitton Moet Hennessy (LVMH) is negotiating to invest about US$ 150 m (Rs 7.5 bn) in Raymond Apparel according to an article in a leading business daily. If this deal goes through it will be the largest PE investment in an Indian apparel company. The exact stake to be transferred is still under negotiation but it could be anywhere between 10% and 20%.

Raymond Apparel owns several popular brands including Park Avenue, Parx and Notting Hill sold at its exclusive retail stores. Raymond Apparel is fully owned by Raymond Ltd. According to consultancy firm McKinsey, India's apparel market will be worth an estimated US$ 40 bn in 2015. Growth in organized retail, a young population and rising per capita income are the key growth drivers of this industry. However the market is dominated mainly by unorganized players. In the listed segment Arvind Ltd is Raymond's competitor along with Aditya Birla Group's Madura Fashion & Lifestyle.