Investors cheer energy & capital goods

Tue, 16 Mar 11:30 am

   Previous Close   

   Pre-Open   

   09:30 am   

   01:30 pm   

   Closing   

After starting on a positive note, the Indian stock markets could not hold on to the opening gains during previous two hours of trade. The indices kept swinging to either side of the dotted line on account of alternate bouts of buying and selling activity. Currently, stocks from the realty, banking, FMCG and telecom sectors are dragging the markets lower, while stocks from the oil & gas, capital goods and consumer durables sectors are trading higher.

The BSE-Sensex and the NSE-Nifty are trading higher, up by 20 points and 7 points respectively. The BSE-Midcap and BSE-Smallcap are trading in the positive, up by around 0.41% and 0.74% respectively. The rupee is trading at 45.58 to the dollar.

According to a leading business daily, PFC (Power Finance Corporation), the country’s largest financer of power projects has tied up with SBI for raising dollar denominated funds worth US$ 300 m (about Rs 14 bn) to finance its future lending. This loan will be disbursed by SBI’s London branch under the External Commercial Borrowing (ECB) route. The sum raised is expected to be used for funding power generation, transmission and distribution projects in the country.

PFC had previously targeted to raise funds of around Rs 210 bn in FY10. Out of this it has already raised Rs 160 bn this fiscal. We believe that PFC’s ability to access long term funding, sustain reasonable margins and good asset quality sets it apart from financial institutions in the private sector. Currently, PFC as well as SBI are trading lower.

Tata Motors is among the top gainers on BSE today. As per a leading business daily, Tata Motor’s global sales increased by 59% YoY in February 2010. The company sold a total of 89,768 units of commercial and passenger vehicles on back of robust demand. The sales of passenger vehicles stood at 47,108 units, up by 50% YoY in the month of February, while the same for commercial vehicles was up 70% at 42,660 units. The company’s luxury cars from Jaguar Land Rover also grew 60% YoY, standing at 17,197 units. All these pegged the cumulative sales growth for this fiscal at 17% YoY. In FY10, the company has so far sold 35% more commercial vehicles and 4% more passenger vehicles as compared to what it sold in corresponding period in FY09.

We believe that uptick in these vehicle sales number indicates an improvement in the overall economic climate which bodes well for the company. Moreover the improvement at Jaguar Land Rover, Tata Motors’ largest subsidiary is particularly heartening. Investors continue to favour the stock of Tata Motors for its strong fundamental prospects