Banking stocks push markets lower

Tue, 29 Jun 09:30 am

   Previous Close   

   Pre-Open   

   11:30 am   

   01:30 pm   

   Closing   

The Indian markets have started today's session on a negative note. The benchmark indices opened at the breakeven mark but soon slipped into the negative territory. These have not managed to cut their losses since then. Other key Asian markets are in the red with China (down 1.8%) leading the pack of losers. The US markets closed lower by 0.1% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading weak with banking, construction and metal majors bearing the brunt of selling activity. The BSE-Sensex is trading lower by around 90 points, while the NSE-Nifty is down by about 30 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.2% and 0.3% respectively. The rupee is trading at 46.38 to the US dollar.

Auto stocks have opened the day on a negative note. Losers here include Tata Motors and Ashok Leyland. As per a leading business daily, Tata Motors plans to raise Rs 47 bn through a combination of instruments to meet capital requirements and to reduce debt. It will seek shareholders' approval through a postal ballot. It will also seek approval for raising borrowing limits and for creation of security on the company's properties to Rs 300 bn from Rs 200 bn. The company has a debt of Rs 188 bn on a standalone basis. It has to repay debt of Rs 80 bn this financial year, besides financing capital expenditure of about Rs 30 bn. It may be noted that the company had issued global depository shares and convertible notes in October to raise about Rs 35 bn. In March, it divested its 20% stake in the construction equipment joint venture, Telcon for Rs 11.6 bn.

Power stocks have opened the day on a positive note. Gainers here include CESC and Tata Power. As per a leading business daily, NTPC plans to raise a syndicated loan of over Rs 13.8 bn to finance its ongoing power capacity addition initiatives. The company is in talks with foreign banks to discuss the timing of the loan. The loan will be through external commercial borrowing and is likely to be at an interest rate of around 3%. It may be noted that it has proposed a capex of Rs 290 bn for the current year. It is currently engaged in adding capacity of 22,000 mega watts by the end of the eleventh five year plan (March 2012). Hence, the move to raise the loan is crucial for NTPC despite its cash reserves of around Rs 180 bn.