Markets open on a volatile note

Thu, 15 Jul 09:30 am

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The Indian markets have started today's session on a volatile note. The benchmark indices below the breakeven mark, but soon moved into the positive territory. However, they have not been able to hold on to their gains since then. Other key Asian markets are in the red with Japan (down 1%) leading the pack of losers. The US markets closed marginally higher yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading a mixed bag with power and FMCG majors finding buying interest. However, software and auto stocks are trading weak. The BSE-Sensex is trading lower by around 5 points, while the NSE-Nifty is down by about 2 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 0.1% and 0.3% respectively. The rupee is trading at 46.75 to the US dollar.

Engineering stocks have opened the day on a positive note. Gainers here include Engineers India and Suzlon. As per a leading business daily, L&T has bagged the Rs 121 bn Hyderabad Metro Rail Project. The project is expected to achieve financial closure in six months and thereafter take about four years for completion. Apparently, the company had asked for Rs 14.6 bn viability gap fund, or government grant, which was much lower than other bidders. Apart from the ticket fares, the company will get real estate construction rights over 18.5 m square feet. Moreover, the concession period could be extended by 25 years after the first lease period of 25 years, excluding construction period. It may be noted that the project was initially bagged by Maytas Infra. But it ran into trouble after the Satyam scandal broke out and could not achieve financial closure.

Steel stocks have opened the day on a positive note. Gainers here include Tata Steel and SAIL. As per a leading business daily, Tata Steel plans to raise Rs 16 bn in a preferential allotment of shares and warrants to its promoter, Tata Sons. The preferential allotment will take place at Rs 594 per share. In all, the company will issue 15 m shares and 12 m warrants to Tata Sons. The warrants can be converted within 18 months of the allotment. It may be noted that Tata Sons holds a 29% stake in the company. This would rise to 31% after the allotment of shares and conversion of warrants. Given Tata Steel's financial leverage and backward integration plans, the additional equity will come in handy. The company had a net debt of US$ 9.8 bn on its books as on 31st March, 2010. It is also looking at backward integration of Corus and developing mines in Mozambique and Canada.