Investors prefer small, midcaps

Tue, 5 Oct 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

The Indian markets saw a volatile session with the indices witnessing alternate rounds of buying and selling during the previous two hours of trade. Currently, stocks from the consumer durables, power and healthcare spaces are leading the pack of gainers, while those from the FMCG and banking spaces are amongst the top underperformers.

The BSE-Sensex is currently trading higher by around 5 points, while the NSE-Nifty is up by about 7 points. Stocks from the small and midcap spaces are trading firm with the BSE-Midcap and BSE-Smallcap indices trading higher by 0.9% and 1.3% respectively. The rupee is trading at 44.74 to the US dollar.

Cement stocks are trading up led by Prism Cement and Heidelberg Cement. A leading financial daily has reported that cement demand in September was up in several parts of the country. Moreover, cement companies have hiked the price of cement by about Rs 10 to Rs 20 per 50 kg bag. In fact companies are looking at another Rs 5–10 hike soon. This hike has been due to sharp increase in input costs, mainly coal, power and freight. The maximum hike of Rs 20 has been seen in south India followed by western and central regions where prices were raised by Rs 10 per 50 kg bag. On the other hand, cement prices in north and east were under pressure due to flooding and excess supply. However, demanded from these regions is also expected to pick up in October. The all-India capacity utilization in August was 73%, down from 82% in the same period last year. The western region recorded the lowest utilization at 69%, while Central India topped the table with 91% utilization. Till August, the industry capacity was 261 m tonnes (mt). It may be noted that new capacity of nearly 30 mt was added in 2009-10, of which the south accounted for about 40 %.

Healthcare stocks are currently trading firm led by Orchid Chemicals, Sterling Biotech, Fortis Healthcare and Glenmark Pharmaceuticals. The stock of Lupin is currently trading higher by about 2%. Gains in the stock are on the back of the company's American subsidiary, Lupin Pharmaceuticals (LPI) receiving the final approval from the US FDA (Food and Drug Administration) for launching the generic version of 'Hyzaar' and 'Cozaar' tablets. These medicines are from Merck's portfolio and are used to treat high blood pressure. It is reported that these tablets have recorded combined sales of US$ 1.6 bn (approximately Rs 72 bn) during the twelve month period ended June 2010. This is a positive development for the company as it opens up a strong market for the company. For the year ending March 2010, the company reported revenues of about Rs 49 bn. Growth during the year was led by the US market, with the branded generics business growing by 72% YoY. This business now accounts for 37% of the overall sales in the US.