Sensex sheds its morning gains

Mon, 4 Oct 01:30 pm

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Although trading in the positive territory, the Indian markets shed a portion of their gains during the previous two hours of trade. Currently, stocks from the consumer durables and realty spaces are the top performers, while those from the capital goods and FMCG space are the worst performers.

The BSE-Sensex is currently trading higher by about 90 points (up 0.5%), while the NSE-Nifty is up by about 30 points (up 0.5%). Stocks from the mid and smallcap spaces are also in favour with the BSE-Midcap and BSE-Smallcap indices trading higher by 0.6% each. The rupee is trading at 44.49 to the US dollar.

Banking stocks are trading mixed with ICICI and Bank of India trading firm while HDFC Bank and PNB are trading weak. As per a leading financial daily, India's largest bank, SBI is launching its retail bond by October 13th or 14th. As per sources, there will be two sets of bonds. A 15 year upper Tier II bond and a 10-year lower Tier II bond. The 15-year bond will have a call option in the 10th year and the 10-year bond will have a put option in 5th year. The call option will enable the bank to repay the bonds in the 10th year, while the put option will allow the investor to redeem the bonds in the 5th year. The size of the issue will be Rs 5 bn with a greenshoe option of another Rs 5 bn. SBI has also written to ministry of finance for raising Rs 200 bn more to meet its fund requirements for the next couple of years. The bank is also planning to raise an additional Rs 400-500 bn over next five years.

Engineering stocks are currently trading mixed with L&T and Thermax trading weak, while Suzlon Energy and BHEL are trading firm. The stock of wind turbine manufacturer, Suzlon is currently the top gainer amongst stocks forming part of the BSE-100 Index. Gains in the stock are seemingly on the back of the company's management expecting the wind energy sector to improve in the coming few years. The company expects the industry to have no excess capacity in about two years. This would mainly be on the back of the demand from Asian markets. For the current year, the company's Chairman, Mr. Tulsi Tanti, expects the scenario to remain stagnant, with supply being in excess of demand. This scenario has come about in the wind turbine industry as it was strongly impacted by the economic crisis. However, Mr. Tanti believes that the worst phase is over. A few weeks ago, the company had announced plans of expanding capacity in China, which is believed to be the world's fastest growing green-energy market. Other wind power majors have also shown interest in entering China in recent times.

Suzlon's financial performance over the past two years has been hampered by the slowdown. During FY10, the company reported a 21% YoY decline in revenues and a loss at the bottomline level. Operating profits declined by 70% YoY with margins falling to 3.8% from 10.1% during the previous fiscal.