Markets begin on a positive note

Thu, 3 Jun 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 but soon surged into the green. They have managed to hold on to their gains since then. Other key Asian markets are in the green with Japan (up 2.6%) leading the pack of gainers. The US markets closed higher by 2.3% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading strong with metal and construction majors attracting investors' interest. The BSE-Sensex is trading higher by around 236 points, while the NSE-Nifty is up by about 75 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 1.2% and 1.1% respectively. The rupee is trading at 46.35 to the US dollar.

FMCG stocks have opened the day on a positive note. Gainers here include Godrej Consumer and Henkel India. As per a leading business daily, Godrej Consumer has acquired another hair care company Argencos, based out of Argentina. It is the company's second buyout in Latin America in less than two weeks. It had earlier acquired the Issue Group, a market leader in hair colour in Argentina, Peru, Uruguay and Paraguay. The combined sales of Argencos and the Issue Group is over US$ 45 m. It may be noted that Godrej Consumer has been on a major acquisition spree in recent months. It has acquired Nigeria's Tura soap brand and Indonesia's household-care company, the Megasari group. Besides, it has also acquired Sara Lee's 51% stake in its joint venture, Godrej Sara Lee. In our view, the company is expected to continue its strong growth in the future helped by its new acquisitions and better synergies in its international business.

Power stocks have opened the day on a positive note. Gainers here include Tata Power and NTPC. Gujarat Industrial Power announced its FY10 results. The company reported a 19% YoY decline in sales during FY10, largely due to passing on the benefits of lower fuel costs to customers in the form of lower electricity tariffs. However, the company recorded a growth in generation and volume sales of electricity during the year. The company recently commissioned the fourth unit of 125 MW under Phase II expansion of its Surat lignite power project. With this expansion, the company's total power generation capacity stands at 805 MW. Its operating margins surged to 23.3% during the year, from 18.2% in FY09 aided by lower fuel costs (as percentage of sales). The company reported a bottomline growth of 24% YoY during FY10, helped by higher operating margins and lower interest costs.