Buying interest shifts to heavyweights

Tue, 14 Sep 01:30 pm

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Indian indices extended their gains as heavy weights continued to see buying interest during the previous two hours of trade. Stocks from auto and consumer durable space are seeing buying interest while stocks from the realty space are seeing a sell-off.

The BSE-Sensex is trading up by 148 points while the NSE-Nifty is trading 41 points above yesterday's closing levels. BSE-Midcap index is down by 0.4% while BSE-Smallcap index is trading 0.5% below yesterday's closing. The rupee is trading at 46.30 to the US dollar.

Aluminium stocks are currently trading weak led by Hindalco. A leading business daily has reported that mid-sized aluminium player Ess Dee Aluminium is looking to enter the retail aluminium foils space to grow its revenues. What is ironic is that the company is entering into a region where global majors such as Novelis and Alcoa have reduced focus or divested their aluminium foils business. Also with this move, Ess Dee will be taking on current market leader and aluminium giant Hindalco. As per the company's management, the kitchen foils business is sized at about Rs 5 bn and is growing at a pace of about 30%. The company is currently mainly focused on pharma and industrial foils packaging. The company's management believes that the overall kitchen foils business is quite fragmented with a large number of small players.

We believe this is a positive development for the company considering that it is a new segment in its core business. Also with it being a smaller player, entering a fast growing segment, the possibility of a strong boost in revenue does remain. However, since this is an entry into the retail market, a huge amount of investment will be required to be made towards branding and marketing the product.

IT stocks are trading up lead by Wipro and TCS. TCS reached its lifetime high today. As per a press release, the company is planning to set up an Rs 10 bn campus in Thiruvananthanpuram, Kerela. This campus will be a learning and development campus and will offer TCS' learning curriculum to those who joining the company from colleges. This campus once complete will be able to house 10,000 professionals and will become the company's training centre once complete. Construction will start in 2011-12 and will be complete in 3 years time. This move is being seen as the company's effort to maintain the quality of it professionals in the face of high attrition.