Sensex on a rollercoaster ride

Wed, 12 May 01:30 pm

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The Indian markets witnessed high volatility as alternate bouts of selling and buying led the indices to sharply move around the dotted line. After seeing a strong sell off about two hours ago, the Sensex rose sharply into the positive territory as buying intensified. Stocks from the realty, FMCG and healthcare spaces are amongst the top gainers, while those from the power and metal spaces are amongst the top losers.

BSE-Sensex is trading higher by about 45 points (up 0.3%), while the NSE-Nifty is trading higher by about 15 points (up 0.3%). The BSE-Midcap ad the BSe-Smallcap indices are trading lower by 0.3% each. The rupee is trading at 45.24 to the US dollar.

Healthcare stocks are currently trading mixed with Dr. Reddy's, Cadila Healthcare and Glenmark Pharmaceuticals trading firm, while Panacea Biotec and Piramal Healthcare are trading weak. Healthcare major Ranbaxy announced its 1QCY10 (December ending company) yesterday. The company reported strong performance as its revenues increased by 75% YoY during the quarter. Growth was primarily led by strong sales from 2 first-to-file (FTF) products in the US and growth in key geographies. Since the company had the exclusivity for these products with no competition from authorized generics, the revenue growth was robust in the first quarter. The company's operating margins stood at 38% as compared to 0.1% during 1QCY09. The benefit of the 2 FTF products along with cost rationalization measures led to an overall improvement in operating margins. During 1QCY09, the company reported a loss at the bottomline level to the tune of Rs 7.6 bn on the back of a poor operating performance. During 1QCY10, the company recorded net profits of Rs 9.6 bn. In addition, the company recorded a forex gain of Rs 4.5 bn during the latest quarter as against forex losses of Rs 11.3 bn in 1QCY09.

FMCG stocks are currently trading mixed with P&G Hygiene, HUL and Marico Industries trading firm, while Godrej Consumer Products and Pidilite Industries are trading weak. As per a leading financial daily, Godrej Consumer Products Limited (GCPL) is in talks with private equity investors to raise US$ 125 m. These investors include US giants Carlyle Group and Blackstone, as well as India's ChrysCapital and Standard Chartered Private Equity. JM Financial has been hired by GCPL to arrange this deal. It may be recalled that the company had recently taken approval from its board to raise upto Rs 30 bn in debt and equity for its inorganic growth plans. This fresh capital is expected to finance new acquisitions. The company has stated recently that it has been looking for possible acquisitions in Latin America. Furthermore, it was in the news recently that Godrej was in talks with an Argentine company, Issue Group Co, a family-owned business which specializes in hair coloration, for a possible buyout. It is possible we could hear news from Latin America soon.