Another lackluster day

Wed, 10 Mar Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Although off the day’s lows, the markets could muster only small gains during the closing hours of trade and thus end the day marginally in the green. While the Sensex edged higher by around 40 points (0.3%), NSE Nifty closed with small gains of around 10 points (up 0.3%). BSE Midcap and Small cap indices traded weak today and recorded marginal declines. On the Sensex, three stocks gained for every two that ended lower.

Most Asian markets closed in the green today and Europe too is showing a fair degree of buoyancy right now. As regards the exchange rate, the rupee was seen trading at Rs 45 per dollar at the time of writing.

It was yet another lackluster ending for the markets today. The indices opened strongly in the morning and at one point, the Sensex was trading more than 100 points higher than the previous close. But rather than buying into the momentum, investors chose to take some profits off the table and this resulted in the index giving up almost all its gains and inching perilously close to the breakeven. While buying interest once again reared its head during the fag end of the day, it did not prove strong enough to breach the day’s highs and eventually, the markets closed the day with marginal gains.

Hero Honda, India's largest two-wheeler maker ended the day with a yearly high on yet another occasion. The company has been on the investor radar for quite some weeks now and has in fact seen its price go up by nearly 25% in just over a month. While the Union Budget has definitely done its bit to improve the company’s prospects by putting in more discretionary income in the hands of the consumers, there is a growing buzz that the company is planning to build a new plant that besides servicing the domestic demand would also cater to exports markets like Africa. Thus, both of these factors put together could bring about a sizeable improvement in the company’s earnings power going forward, a fact that does not seem to have lost on the investors who have rewarded the stock with some handsome gains.

Power major NTPC was amongst the key losers on both the Sensex and Nifty today. Earlier the company has announces that it is aggressively looking at international markets to source coal for its future capacity expansion. The company is targeting a generation capacity of 75,000 MW by 2017, from around 30,000 MW currently. Given this target, it plans to consume around 300 m tonne (MT) of coal by that year as compared to about 126 MT currently. As the company is facing issues with sourcing coal from the domestic market (it imports 10 MT of its annual requirements currently), and that its coal mines will start producing coal only in a few years, imports is the best alternative it has. However, given that imported coal comes at an expensive price (almost double as compared to domestic coal), the company will most likely see its fuel costs rising. Anyways, amidst all this, the primary concern is whether the company will actually be able to meet its aggressive generation capacity target for 2017, which would require it to add around 6,500 MW of new capacity annually for the next seven years. This is almost double of what it is just managing to do as of now.