Markets close with a flourish

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After opening in the positive, markets traded firm throughout the trading session today. While trade in the morning session was rangebound, buying activity steadily increased in the later hours to ensure that the indices closed well above the dotted line. While the BSE Sensex closed higher by around 166 points (up 1%), the NSE Nifty gained around 41 points (up 1%). Midcap and small cap stocks also closed higher with gains of 1% and 2% respectively. Gains were largely seen in IT, metals and capital goods stocks.

As regards global markets, Asian indices closed firm today while European indices have also opened on a strong note. The rupee was trading at Rs 44.88 to the dollar at the time of writing.

Engineering major BHEL announced its provisional flash results for the full year FY10. The company achieved revenues of Rs 340 bn during FY10, thus witnessing a sales increase of 21% YoY during the year. Profit before tax, on the other hand was up 31% YoY. On the bottomline front the company saw an increase of 37% YoY in net profits for FY10 by clocking in profits of Rs 42.8 bn. Consequently, BHEL's earnings per share for FY10 stood at Rs 87.6 compared to Rs 64.1 for FY09. Order inflows during the year remained almost flat at about Rs 590 bn. However, the company's order book at the end of the year stood at 1,438 bn, which is 4.2 times FY10 sales. In a press conference today, the company's management expressed that it is aiming for a turnover of US$ 10 bn to US$ 11 bn by 2011-12 on the back of strong demand from the power generation sector. BHEL gained over 1% on the bourses today.

India's largest and the world's second largest integrated zinc producer Hindustan Zinc announced the commencement of metal production on March 28, 2010 from its hydro-zinc smelter at Dariba Smelting Complex, Rajasthan, which has a capacity of 210,000 tonnes per annum. With the commencement of production, the company's total zinc - lead metal capacity now stands at 964,000 tonnes per annum. The project was completed one quarter ahead of schedule. The commencement of production from this capacity expansion will provide a boost to the company's volumes for FY11. It may be noted that this brings the company within striking distance of its aim of achieving a capacity of 1 MTPA of zinc lead metal capacity. The achievement of this target is set to make the company the largest zinc lead producer in the world. The stock of Hindustan Zinc closed higher by over 3% today.

As the economic scenario improves in India, India's largest cement manufacturer ACC is upbeat about the prospects of real-estate construction in the country. The company believes that on the back of improved demand for residential and commercial property, a lot of heaped up inventory of unsold real estate will be consumed. It is betting big on its ready-made concrete (RMC) business which will get a boost from the spurt in construction of high-end as well as affordable housing in India. It may be noted that ACC postponed its expansion plans for RMC in 2009 as due to recession the realty demand declined sharply particularly in metros and cities.

The company in which Swiss cement major Holcim owns 46% stake has around 90% of its assets in urban India. In CY09, though the company grew its topline and bottomline by 10% and 33% respectively, its concrete business continued to bleed. RMC business has been a laggard for all the cement companies in the industry as most of them are still to breakeven in this segment. Nevertheless, ACC plans to invest Rs 6 bn to increase the number of its RMC units from present 44 to 200 by 2012. The company believes that its RMC segment will become profitable by the end of FY11. We believe that this is a tall feat to achieve given that in India the consumption of RMC is only 5% of the overall cement consumption. This is way too less than the developed markets where RMC consumption is as much as 60% of cement demand.