Key indices continue poor show

Tue, 17 Sep 11:30 am

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After a weak opening, the Indian stock markets recovered a bit in the last two hours of trade but are still trading in the red. Sectoral indices are trading mixed. IT and Auto are leading the gainers; while Power and Capital Goods are leading the pack of losers.

The BSE-Sensex is down 28 points while the NSE-Nifty is trading lower by 16 points. The BSE Mid Cap and BSE Small Cap indices are trading down by 0.4% and 0.3% respectively. The Rupee is trading at 63.6 to the US Dollar.

Engineering stocks are trading mix today. Sanghvi Movers and Jain Irrigation are among the top gainers. BGR Energy and Suzlon Energy are leading the losers. Bharat Heavy Electricals Ltd (BHEL) has sent legal notices to its customers to recover its dues of Rs 170 bn. The customers include Abhijeet Group, Adhunik Group, Visa Power Ltd and Monnet Ispat and Energy Ltd. According to a leading business daily, BHEL has decided to stop the work on few sites if the customers have not cleared its previous dues. It also mentioned that BHEL has already demobilized the project of Abhijeet Infra and Visa Power. The decision to stop work on concerned project sites come in the wake of mounting debtors amount on BHEL's balance sheet and stress on its working capital. At the end of 1QFY14 BHEL's debtors were worth Rs 390 bn. However, out of this nearly 50% of the amount was retention money which is paid only after the company meets certain project specific milestones. BHEL is trading 1.9% down today.

Most of the IT stocks are trading higher today. Wipro and HCL Tech are among the top gainers. It appears that innovation in the fast growing cloud computing space is on in full swing. The country's third largest software services firm Wipro, has tied up with software giant Microsoft and an ABB promoted firm, Ventyx, to provide a cloud based solution for power utilities. This propriety solution will enable electric utilities and power generation companies to improve their profitability by enhancing their ability to mitigate market risks. It will also help them avoid costly investments in IT infrastructure and future maintenance. For years power generation companies and utilities have used old simulations models for revenues/profit forecasting and to analyze hedging strategies related to their physical assets (e.g., power stations). Such complex simulations would consume vast computing resources, and companies typically would need to wait many hours for the results of critical analysis. This would delay decision making.

This new solution will allow power companies to analyze their asset portfolio more frequently. Modeling asset portfolios in this way will helps customers improve fuel budgeting, resource planning and transaction evaluation and risk management. Currently cloud based services contribute less than 10% of revenues for Wipro but these services are growing rapidly. Wipro is trading up 3.3% today.