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Oil & gas stocks fuel markets
Tue, 19 Apr 11:30 am

After opening the day in the red Indian stock markets have made a sharp recovery on buying interest in heavy weights over the last two hours of trade. Stocks from the oil & gas and banking space are trading firm while stocks from the realty and power space are trading weak.

The BSE-Sensex is up by 57 points while NSE-Nifty is trading 10 points above the dotted line. BSE Midcap index is trading flat while BSE Small cap index is trading 0.2% above yesterday's closing. The rupee is trading at 44.63 to the US dollar.

Engineering stocks are trading mixed with Jyoti Structures and Alstom Projects trading firm while BHEL and Finolex Cables are trading weak. As per a leading financial daily, Larsen & Toubro (L&T) plans to sell its electrical and automation business. The proceeds from this sale are expected to help fund almost 50% of the infrastructure equity required for the company's capital expenditure. It may be noted that L&T has a capex plan of Rs 613 bn in the infra development business which will require about Rs 184 bn as equity (assuming a debt to equity ratio of 7:3). The electrical and automation business of L&T has been valued at Rs 89 bn by Bank of America Merrill Lynch. This move is seen as part of L&T's strategy to exit noncore and dilutive businesses where it does not have a clear leadership and reallocate capital to other businesses. L&T draws about 70% of its revenues from the domestic markets. It has a 30% share in the country's electrical and automation market with manufacturing units at Navi Mumbai, Powai, Ahmednagar, Mysore, and Coimbatore.

Hotel stocks are trading mixed with Hotel Leelaventure and Indian Hotel trading firm while Oriental Hotels and Country Club are trading weak. As per a leading financial daily, Hotel Leelaventure is looking to raise Rs 6 bn from private equity firms by selling 14.95% fresh equity. The hotel chain also plans to raise Rs 9.5 bn by selling and developing land for residential purposes. Hotel Leela is also looking at conversion of foreign currency bonds. As per management, the bonds issued earlier may be converted in 5-6 years and may yield Rs 4 bn. These steps are being taken to reduce the existing Rs 38 bn debt by half and thereby reduce interest costs. The hotelier has launched a 260 room new hotel in New Delhi recently and plans to come up with a brand in the mid-market segment.

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