Markets begin on a volatile note

Thu, 25 Mar 09:30 am

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The Indian markets have started today's session on a volatile note. The benchmark indices opened above yesterday's closing levels, quickly slipped into the red, and have slowly clawed back upwards since then. Other key Asian markets are trading in the red with Hong Kong (down 1.3%) leading the pack of losers. The US markets closed lower by 0.5% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading a mixed bag with telecom stocks attracting investors' interest. However select banking stocks are in the red. The BSE-Sensex is trading lower by around 6 points, while the NSE-Nifty is down by about 3 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.1% and 0.3% respectively. The rupee is trading at 45.70 to the US dollar.

Auto stocks have opened the day on a mixed note. Gainers here include Bajaj Auto and Eicher Motor. However, Ashok Leyland and Tata Motors are trading in the red. As per a leading business daily, Tata Motors has offered to convert bonds worth US$ 431 m into shares about a year before they mature. The offer includes Japanese Yen denominated zero-coupon bonds due March 2011 worth US$ 131 m and 1% bonds due April 2011 worth US$ 300 m. It may be noted that the exact conversion ratio will be decided at a subsequent date. Tata Motors has also been selling shares in group firms to reduce its debt which has piled up after the Jaguar-Land Rover acquisition in 2008. The conversion will reduce the company's debt and increase its equity at the same time. This will help the company bring down its financial leverage. However, the stake of existing shareholders will be diluted due to the expanded equity base.

Pharma stocks have opened the day on a positive note. Gainers here include Aurobindo Pharma and Torrent Pharma. As per a leading business daily, Cipla has sold its emergency contraceptive brand, i-pill, to Piramal Healthcare in a transaction worth Rs 950 m. The two-year old brand is sold over the counter (OTC) and does not require a prescription. It is India's largest-selling emergency contraceptive. The i-pill notched up sales of around Rs 310 m through stockists in the last 12 months. It may be noted that India's OTC's market is estimated at around Rs 82 bn. Cipla's decision to sell i-pill reflects its desire to focus on its core competence of prescription drugs where it has a market share of 5.4% with 924 drugs.