Indian equity markets open firm

Thu, 19 Jul 09:30 am

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All Asian equity markets have opened the day on a positive note with market indices in Hong Kong (up 1.7%), South Korea (up 1.9%) and China(up 1.1%) leading the gains in the region. The Indian equity market indices have opened the day in green as well. All sectoral indices are trading in the positive with metal and power sector witnessing maximum gains.

The Sensex today is up by around 105 points (0.6%) and the NSE-Nifty is up by around 33 points (0.6%). Both Mid cap and Small Cap stocks are trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.6% and 0.5% respectively. The rupee is trading at Rs 55.31 to the US dollar.

Barring Maharasthtra Seamless Ltd., all Steel stocks are trading in green led by Tayo Rolls and JSW Ispat Ltd. As per a leading financial daily, Tata Steel has suggested that on account of a decline in steel consumption in the European Union (EU) and United Kingdom (UK), the company is likely to witness a severe stress over the next year or two until there is a recovery in Western European economy. The unexpected increase in prices of coking coal and iron ore along with a sharp decline in demand in Europe is expected to impact the company's performance. As per the management, the operations in India are expected to remain strong and the real growth is expected to come from Asia, Africa and Latin America. The company will be taking some restructuring and capacity rationalizing initiatives to reduce costs and under utilization. The management has also expressed concerns over major Greenfield capacity expansion projects getting delayed in India due to hurdles in land acquisition and approvals for necessary mining rights.

Engineering stocks are trading mainly in the green with Carborundum Universal Ltd. and Honeywell Automation Ltd being the leading gainers. As per a leading financial daily, Larsen & Toubro's (L&T) electrical and automation business is likely to grow by 15% this year .The company management expects 26% the business from this segment to come from international markets as there is a lot of demand from Gulf Cooperation Council countries like the United Arab Emirates (UAE), Saudi Arabia, Qatar, Bahrain, and Kuwait. The business segment has witnessed two acquisitions along with capacity expansion this year. As per the management, it will be crucial to add new products to the segment as they count for around 30%-31% of the sales. In the fiscal year 2012 (FY12), the company witnessed 12% year on year (YoY) decline in the order inflows and the management has now decided to focus on business abroad.