Smallcaps in the limelight

Thu, 17 Mar 11:30 am

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Indian stock markets are trading flat with a negative bias as investors traded cautiously on rate hike concerns over the last two hours of trade. Stocks from the IT and FMCG space are trading weak, while stocks from the capital goods and consumer durable space are trading firm.

The BSE-Sensex is down by 34 points while NSE-Nifty is trading 10 points below the dotted line. BSE Midcap index is up by 0.2%, while BSE Small cap index is trading 0.3% above yesterday's closing. The rupee is trading at 45.23 to the US dollar.

Engineering stocks are trading firm led by Havells India and Voltas. As per a financial newspaper, Voltas is looking at becoming the number one player in the Indian air conditioner market this summer. For this, the company has launched 70 new models of air conditioners in the capacity band of 0.75 tons to 3 tons. All these newly launched products are 5-star rated and are likely to boost the sales of the company. The retail AC market is said to be growing at 30% rate in the last few years and Voltas has been increasing its focus on this segment. The company is also planning to invest Rs 650 m to ramp up its production capacity and marketing activities.

It may be noted that, presently, Voltas is the second player in this market after the Korean brand LG. It has increased its market share from 16.5% in April to the present 19%. Also, the sales in the segment have grown by 65% in the fiscal year till date which is twice the industry average.

Power stocks are trading mixed with Gujarat Industries Power Co. Ltd and Neyveli Lignite trading firm while Torrent Power Ltd. and Power Grid Corporation are trading weak. As per a leading financial daily, Tata Power plans to buy a minority stake in overseas coal mines. It may be noted that Tata Power plans to raise its generation capacity to 25,000 MW from 2,800 MW by 2017. Hence the company is planning ahead to secure its raw material supply. Tata Power is also diversifying its power generation. As per a company spokesperson, Tata Power plans to have at least 20% of its power generation coming from cleaner, non-coal-based sources such as hydro, gas, wind, solar and geothermal. Tata Power also plans to expand power distribution and transmission and acquire power generating firms to boost capacity.

With peak power shortfall at 10.5%, Tata Power and other power companies are increasing their capacity. As of now thermal power plants are the biggest source of power generation in the country. However, according to Moody's Investors Service, shortfall in coal supply in India may triple in the next 5 to 7 years. For this reason, power companies are looking overseas to secure coal mines and diversify into other sources of power generation.