Indian stock markets continue to zoom ahead

Thu, 10 May 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

The Indian stock markets continued to trade in a range bound manner during the previous two hours of trade. Barring stocks from the Information Technology space, buying activity is being witnessed across the board, with the BSE-Capital Goods, BSE-Bankex and BSE-Oil & Gas indices leading the pack.

The BSE-Sensex is trading up by about 140 points (0.8%), while the NSE-Nifty is up by 50 points or 1%. Stocks from the mid and small cap spaces are trading higher with the BSE Mid cap and BSE Small cap indices up by about 0.7% and 0.5%. The Rupee is trading at Rs 53.31 to the US dollar.

Stocks from the Oil and gas spaces are trading firm led by Bharat Petroleum Corporation Ltd, Cairn India and Essar Oil. As per a leading financial daily, Reliance Industries (RIL) has raised USD $ 2 bn from German banks to finance capital expenditure in its petrochemical business. The loan has a tenure of 13 years and is backed by German credit insurance provider, Euler Hermes SA. The funds will be utilized to procure goods and services from German suppliers for the expansion of petrochemical projects at Jamnagar, Hazira, Silvassa and Dahej. Reportedly, RIL is investing over USD $ 12 bn in its refining and petrochemical businesses over the next 4-5 years. This includes setting up a petroleum coke gasification project for the production of synthetic natural gas at a cost of USD $ 4 bn. Apart from this, the company is scaling up capacities of PFY, PET, polyester and other intermediate chemicals and building capacities for the manufacture of carbon black and rubber. The total investment earmarked for this expansion is USD $ 8 bn.

Stocks of construction companies are trading mixed with Hindustan Construction Corporation Ltd and C & C Construction trading higher while IVRCL is trading lower. The National Highway Authority of India (NHAI) has a target for awarding projects of 8,800 km during the current financial year FY13. While the target is massive, there was a worry amongst the investors as competition in the road construction segment has intensified substantially in the last few years with many small players bidding for projects across segments. However, a new development would help ease the competitive scenario within the sector. As per a leading business daily, the NHAI plans to awards road projects of 3,000 km or one-third of the full year target in the form of two lane cash contract projects. This could come in as good news for big and smaller players alike as smaller players could target such projects, while the bigger player would focus on the four and six lane projects. As per the NHAI, these two-lane projects would be awarded on EPC (engineering procurement and construction) or cash contract basis rather than on BOT (build-operate-transfer) or BOOT (build, own, operate and transfer) basis because most of the two-lane roads lack heavy traffic. In short, owning such assets would not be viable for smaller players. For smaller players, this would be a breath of fresh air in a time when they are facing problems varying from stiff competition, margin pressure, high interest cost and stretched balance sheets. It is estimated that these the total value of such contracts would stand at about Rs 150 bn.