Market gains ease during the latter half

Wed, 17 Mar Closing

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Although ending well above the dotted line, the Indian markets shed a portion of their afternoon session gains during the final two hours of trade. The overall market breadth however remained negative as the number of losers outnumbered the gainers by a ratio of 1.3 to 1 on the BSE. While the BSE Sensex closed higher by around 110 points (up 0.6%), the NSE Nifty gained around 35 points (or 0.7%). While midcap stocks ended the day on a firm note (BSE-Midcap Index ended higher by about 0.2%), those from the small cap space saw some pressure as the BSE-Smallcap Index ended lower by about 0.1%. on an overall basis, stocks from the healthcare, metal and capital goods sectors ended higher while those from the realty and auto spaces were amongst the key losers.

As regards global markets, Asian indices closed in the positive today. European indices have opened firm. The rupee was trading at Rs 45.36 to the dollar at the time of writing.

As per a leading business daily, Marico has cut prices of its Shanti Badam Amla hair oil by 25% in an aim to bolster volumes. It must be noted that though Marico is the market leader in the coconut hair oil segment with its brand Parachute, in the value-added hair oils segment (including amla), the company has a small presence. Therefore, this move by the company besides boosting volumes, is also aimed at garnering more market share. As per industry estimates, Marico has a 2.6% volume share in the value-added hair oils as against 22% for Dabur. With the price cut by Marico, the consumer price premium of Dabur's amla hair oil to that of Marico has expanded from around 20% earlier to nearly 60%.

The Indian hair oil market is estimated to be worth Rs 46 bn, of which coconut oil accounts for Rs 19 bn and value-added (almond, amla and others) oils the balance. Given that amla hair oil does not account for a significant portion of Marico's earnings, it is likely that any resulting price war would not affect the company's performance much.

As per a leading business daily, Tata Power and the Indonesian arm of Chevron are some of the bidders for the geothermal power project in Indonesia. Tata is part of the consortium with Indonesian firm PT Supraco Energy. The bids are to build a geothermal power plant in Sorik Merapi, North Sumatra, with initial capacity of 55 MW which will gradually increase to 200 MW. It must be noted that numerous volcanoes in Indonesia means that the country has the potential to produce an estimated 27,000 MW of electricity from geothermal sources. However, this has not really caught on because the high cost of geothermal energy makes energy generated from it pretty expensive. Therefore, it remains to be seen what the positives will be for Tata Power in the event that it is successful in bagging the project.

Infrastructure is vital for India's economic growth and one such area that requires attention is the development of ports. In this regard, the government has highlighted that the capacity of ports is likely to reach 1.5 bn tonnes over the next two years, with a Rs 1,000 bn expansion programme underway for docks and the shipping sector. It must be noted that ports handle around 95% of the country's total trade in terms of volume and 70% in terms of value. Of this, 12 major state-owned ports accounted for 70% of the total traffic. During the last 5 years itself, the total traffic handled by these major ports has grown at a compounded annual growth rate of 9%. What is more, the Shipping Ministry is also contemplating formulation of policies that deal with issues of port efficiency and productivity among other factors. Indeed, if the government successfully executes its plans, the development of ports will certainly give that extra fillip to India's GDP in the future.