Realty, power stocks least favoured today

Wed, 23 Oct Closing

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Although Indian markets witnessed buying activity towards during the last hour of trade, the same was not enough to pull markets above the dotted line. The BSE-Sensex closed lower by about 97 points or 0.5%, while the NSE-Nifty ended lower by about 25 points or 0.4%. Barring stocks from the capital goods, banking, consumer durables and FMCG spaces, losses were seen across the board. Realty and power stocks were amongst the least favoured. BSE Mid Cap stocks closed the day on a flat note while the BSE Small Cap Index closed lower by 0.3%.

Asian indices ended the day mainly in the red, with China, Hong Kong and Japan closing lower by about 1.3%, 1.4% and 2% respectively. The rupee was trading at Rs 61.6 to the dollar at the time of writing.

Stocks of cement manufacturers ended the day on a weak note with Heidelberg Cement, Ultratech Cement and India Cements leading the pack of losers. Cement maker ACC Ltd has saw its profits halve for the quarter ended September 2013 (3QCY13). Profits declined by over 50% on account of lower realizations on the back of sluggish market conditions. The company's operating profits (EBITDA) declined to Rs 2.3 bn as against Rs 4.2 bn in the corresponding quarter of the previous year. Net sales of Rs 25 bn (on standalone basis) grew at a marginal rate of 3.2% YoY in 3QCY13. Higher costs on account of higher power and transportation costs also dented the operating profit margins. As per the company, there were increases in the prices of diesel, coal and railway freight which could be countered partly through the company's ongoing initiatives to achieve improvements in operations, sales and logistics. Other income increased by 4.8% YoY, while interest expenses declined by 57.1% YoY. That said, ACC is hopeful of a gradual but slow improvement in demand for cement going forward on the back of extended monsoons and its positive impact on agriculture sector.

Stocks of power companies ended the day on a weak note with JSW Energy, Adani Power and National Thermal Power Corporation (NTPC) leading the pack of underperformers. As reported by Reuters, Tata Power is mulling selling some of its investments or even raising equity to lower the debt on books. Given that the company's Mundra power plant continues to report losses on the back of it not being able to cover its fuel costs has led the company to contemplate such measures. It is believed that the debt on the company's book stands at a massive Rs 380 bn as of June 2013. The company's management has added that the company is looking at various options to improve its health and that nothing has been finalised so far. The stock ended lower by 0.5% today.