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Morning gains wiped out
Tue, 22 May 01:30 pm

The Indian stock markets nosedived into the red with the markets wiping out all their morning gains during the previous hour of trade. Realty, FMCG and engineering stocks are leading the pack of losers while stocks from the IT and energy spaces are amongst the most favoured at the moment.

The BSE-Sensex is trading lower by about 15 points (0.1%), while the NSE-Nifty India is down by about 5 points or 0.1%. The BSE Small cap and BSE Mid cap indices are also trading flat. The Rupee is trading at Rs 55.03 to the US dollar.

Stocks of textile companies are trading mixed with Arvind Limited and Alok Industries trading firm while Welspun India and Himatsingka Seide are trading weak. Alok Industries is believed to have sold office space of 252,000 square feet in Lower Parel, Mumbai. The company sold eight out of the twenty floors it owns in an office building for a sum of more than Rs 4.5 bn, translating to about Rs 17,000 per square foot. This move is part of the company's strategy to exit the non-core businesses by monetizing its real estate assets and in the process reduce its debt burden. Currently, the company has debt of nearly Rs 110 bn, which translates to a net debt to equity ratio of 2.5 times. During the full year FY12, Alok Industries' finance costs stood at Rs 11.5 bn as compared to those of the previous year of Rs 7.4 bn. The company initiated the strategy of divesting its real estate portfolio outside Mumbai in the middle of last year. The company signed a deal to sell 73 acres of land in Silvassa.

Power stocks are trading mixed with Tata Power and Reliance Power trading weak while Torrent Power and National Thermal Power Corporation (NTPC) are trading firm. A leading business daily has reported that Power Trading Corporation (PTC) is looking at targeting a concept called 'Group Captives' in a big way. This concept allows large industries to jointly invest in and set up power plants for their own consumption while selling the balance in the market. It is believed that this concept requires consumers to hold together 26% equity in the project and consume 51% of the power generated. PTC will also help the investors arrange for fuel linkages on a long term basis with overseas mining agencies for power projects being set up in coastal regions of India. The company's senior management also discussed the need for focusing on renewable energy given than fossil fuel based generation is under pressure due to climatic changes. And thus, the need to focus on energy efficient generation.

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