Positive start to the week

Mon, 31 May 09:30 am

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The Indian markets have started today’s session on a positive note. The benchmark indices opened at the breakeven mark, slipped below the dotted line but soon surged into the positive territory. They have managed to hold on to their gains since then. Other key Asian markets are in the green with Singapore (up 2.7%) leading the pack of gainers. The US markets closed lower by 1.2% last Friday.

Currently in India, heavyweights from the BSE-Sensex are trading strong with auto, power and engineering majors finding investors’ favour. The BSE-Sensex is trading higher by around 50 points, while the NSE-Nifty is up by about 5 points. Buying interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.3% and 0.5% each. The rupee is trading at 46.47 to the US dollar.

Power stocks have opened the day on a positive note. Gainers here include Tata power and NTPC. NTPC plans to invite fresh bids for the 171 MW Lata-Tapovan hydroelectric project in Uttrakhand. It may cancel the previous tender due to issues like the high price quoted by firms. The company had invited bids for the engineering, procurement and construction contract in November 2008. It had two stages- techno-commercial and price bids. But no contract has been awarded to the winners. There were many loopholes in the tendering process as the lowest bid for equipment was over 40 per cent higher than estimated cost of tender. The project is being developed by NTPC's 100 per cent subsidiary NTPC Hydro. NTPC has plans to set up 1,920 MW of hydro power generation capacity including the 800 MW Koldam Project in Himachal Pradesh and 600 MW Loharinag Pala project in Uttrakhand. It may be noted that the company is also facing cost pressures in some of its other plants which are under implementation or have received bids.

Hotel stocks have opened the day on a positive note. Gainers here include Taj GVK and Indian Hotel. EIH Limited announced its FY10 results late last week. The company reported a 15% YoY decline in topline during FY10 on the back of the economic slowdown and the ‘Oberoi’ property being non-operational as a result of renovations after the terrorist attack. Operating margins contracted by 9.2% to 27.8% during FY10. This fall was on the back of higher cost of provisions, stores and wines, higher staff costs and higher other expenditure as a percentage of sales. Net profits fell by 66% on the back of lower operating income, lower other income, higher interest and depreciation costs.