Metal, FMCG stocks pull indices lower

Wed, 23 Jun 11:30 am

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After starting today's session on a negative note, Indian indices are still lingering in the red. Key Asian markets are also in the negative territory. Stocks from healthcare and consumer durables space are witnessing strong buying interest while stocks from the metals and FMCG space are trading in the red.

The BSE-Sensex is trading down by around 60 points, while the NSE-Nifty is down by about 15 points. However, mid and small cap stocks are witnessing buying interest as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.6% respectively. The rupee is trading at 46.28 to the US dollar.

Power stocks are trading flat. Major losers include NTPC, Lanco Infra and Neyveli Lignite. Gainers here include Suzlon Energy and Bhel. As per a leading business daily, Power Grid Corporation (PGCIL) is planning a bond issue next week to raise Rs 10 bn. It will be an issue with tenure of 14-15 years carrying a coupon of 8.7-8.8%. PGCIL is also planning to raise Rs 80 bn through a combination of offer for sale by the government and fresh issue. The proceeds are expected to be split equally between the government and company as both plan to dilute 10% respectively. As of now there has been no indication of how the company proposes to utilize the funds raised via the equity and debt mix. However, it should be noted that PGCIL has planned a capex of Rs 550 bn during the 11th five year plan. It also has plans to spend Rs 1,000 bn over the next 7 years to double its existing network.

Retail stocks are currently trading mixed with Shoppers Stop, Trent and, Bata India seeing most of the gains. Shoppers Stop plans to invest around Rs 3 bn for its expansion plans. It plans to raise this money though a QIP over the next two quarters. It has been seeing a pickup in demand for lifestyle products among Indian consumers and wants to capitalize on the same.

Shoppers Stop plans to invest Rs 1 to 1.2 bn to open 12 new Shoppers Stop and four new Hypercity stores in FY11. The new Hypercity stores will be coming up in Bhopal, Ahmedabad, Ludhiana and Mumbai. Currently the company has seven Hypercity stores. It plans to take the count of these stores to 25 over the next three years and expects it to break even by FY13. Shoppers Stop as of now holds a 19% stake in Hypercity and intends to increase the stake by 32%. After paying a consideration of Rs 1.3 bn it will have a majority stake in the company.