Mid and smallcaps outperform

Wed, 11 May 01:30 pm

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Indian stock market indices have been trading flat over the last two hours of trade. The sectoral indices are trading mixed with Realty and IT leading the pack of gainers. Oil and Gas and Capital Goods are trading weak.

Both BSE-Sensex and NSE-Nifty are trading flat. However, BSE Midcap and BSE Small cap indices are up by 0.3% and 0.4% respectively. The rupee is trading at 44.70 to the US dollar.

Power stocks are trading mixed. NHPC and PTC India are leading the pack of gainers while Tata Power and NTPC are trading weak. As per a leading financial daily, the private power producers have moved to Central Electricity Regulatory Commission (CERC), accusing NTPC of going on a power purchase agreement (PPA)-signing spree that has an anti-competitive effect on the market resulting in higher power price for consumers. The Association of Power Producers has contended that NTPC has abused its dominant position in the market by entering into agreements with several states between October 1, 2010 and January 5, 2011 for supplying 37, 000 mw as this is done to beat January 5 deadline after which power has to be priced through competitive bidding. The effect of these agreements will be to affect the competition adversely. According to private power players, it is a ploy to escape regulatory oversight and get away with selling costlier power. Such contracts will block the upstream market for coal supply, thus limiting independent power players' access to coal. They have asked CERC to direct NTPC to discontinue this practice.

NTPC has denied the allegations and has justified these agreements by saying that the state is more comfortable with public sector enterprise than private companies for power supply. It said that the agreements to supply 37,000 MW exceed its capacity of 34,194 MW and aim to corner coal mines for captive use.

Paint stocksare trading mixed with Asahi Songwon Colours and Kansai Nerolac trading strong while Jenson and Nicholson and Berger Paints trading weak.

Asian Paints has announced its results for 4QFY11.On a standalone basis, the net sales for the quarter registered an increase of 24% YoY. However, the net profit for the quarter declined 3% YoY on account of rising raw and packing material costs (up 35%). The company has also declared a final dividend of Rs 23.5 per share.

The management expects the rise in raw material prices to continue on account of shortage caused by global capacity constraints. It suggested that the demand conditions for international as well as industrial business were challenging. The stock was trading in the red.