Consumer Goods lead the rally

Mon, 28 Mar 01:30 pm

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   09:30 am   

   11:30 am   

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After consolidating in a narrow territory during the previous two hours of trade, Indian stock market indices have gathered momentum and are currently trading firm. Stocks from Consumer Goods and Banking space are trading firm, while those from Metal and Healthcare space are trading weak.

Currently, the BSE-Sensex is up by 134 points while NSE-Nifty is trading 27 points above the dotted line. BSE Midcap and BSE Small cap indices are both up by 0.50% and 0.33% respectively. The rupee is trading at 44.84 to the US dollar.

Infrastructure stocks are trading mixed with IVRCL Infrastructures and Nagarjuna Constructions leading the gains. However, Supreme Infrastructures and JP Associates are trading weak. The Transport Ministry is likely to award 100 highway projects in the next fiscal spanning 11,000 km requiring an investment of over Rs 1,000 bn. This is almost double of what the ministry awarded in the latest fiscal. The proposed new 100 projects will be part of Phase 3 and Phase 5 of the NHDP programme. The geographies for the said projects have already been identified. Now considering the historical track record of the transport ministry the target does look ambitious.

It may be noted that in the previous two years the ministry was able to award only 50% of the planned projects due to various environmental and land acquisition delays. However, it has taken various measures to overcome the tardy bureaucratic hassles. Some of them include e-tendering, e-procurement and a one-time annual pre-qualification norm which should reduce the time taken to award the projects. If the schedule does go ahead as per plan it would provide huge opportunities for companies like IRB Infrastructures, IL&FS Transporatation, IVRCL Infrastructures, Nagarjuna Constructions and Hindustan Construction.

Telecom stocks are trading mixed with Bharti Airtel and Tata Communications leading the gains. However, MTNL is trading weak. Bharti Airtel is facing a huge penalty from DoT for avoiding the guidelines on re-verification of subscribers in the state of Jammu & Kashmir. The company is currently facing charges for violating the norms of recharging without proper verification. However, it has asked the Telecom Enforcement Resource Monitoring cell (TERM) to review the penalty amount from the proposed 50,000 per case to about Rs 1,000 per case. However, the TERM cell is yet to take a call on the issue as yet.

Separately, the company is expected to receive a demand notice from Department of Telecom (DoT) to recover the dues resulting from alleged under reporting of revenues in 2006-07 and 2007-08. It may be noted that DoT had conducted a special audit on Bharti Airtel to determine whether the licence fee (it is paid on adjusted gross revenue) was paid correctly by the telecom firm. However, it found some discrepancy in the account statement. Nonetheless, the company is of the opinion that the accounts were clear and the said discrepancy was due to differences in interpretation of revenue heads.