Markets up on metal stocks

Wed, 9 Jun 01:30 pm

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Indian indices were seen heading south as investors booked profits in heavy weights during the last two hours of trade. Stocks in the metals and oil & gas space are trading firm while stocks from the FMCG and IT space are trading weak.

The BSE-Sensex is up by 112 points while NSE-Nifty is trading 40 points above the dotted line. BSE-Midcap index is up by 0.7% while BSE-Smallcap index is trading 0.6% above yesterday's closing. The rupee is trading at 47.06 to the US dollar.

As per a leading financial daily, state owned NTPC is planning to acquire the assets of Griffin Coal Mining Co. Pvt. Ltd. This would include the company's power projects as well as its associated coal mines. While the total deal is valued at around US$ 1.2 bn, the actual offer is yet to be made. However, NTPC is concerned about the Australian government's proposal to impose a resource super-profit tax. This tax would replace royalties with 40% tax on all mining profits. For this the company has sought the help of the Indian government. With 70% of power generated in India being coal based, the commodity is in short supply in the country. However, securing coal concessions overseas tends to be uncompetitive for power players as they seek coal for their end use while rival bidders may have other high margin alternate plans. NTPC has been on the lookout for coal mines as it has been increasing capacity aggressively. Needless to say, having coal linkages in place is going to be critical for the success of NTPC's growth plans.

Gains in the stocks of Hotel Leelaventure are possibly on the back of the company's management giving an optimistic view for the current fiscal. Sharing some of the stats, the management has indicated that occupancy rates have been relatively much better as compared to last year. For instance, its property in Gurgaon (NCR, is running at an occupancy level of about 95% over the past few months. This is relatively higher than the industry average in the region, which is at about 80%. As for its other key properties such as Bangalore, Goa, Kovalam, occupancy rates have improved as compared to last year. In Bangalore, for instance, occupancy rates have gone up to levels of 65%. As for the average room rates at these properties, they have seen improvement as well. For instance, in Bangalore and Goa, average room rates have increased by about 10% YoY. However, the management expects the average increase in room rates to move up at a slower pace as compared to the occupancy levels. Although, they will still remain lower than the peak levels of FY08.