Indian markets open firm

Fri, 6 Nov 09:30 am

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Barring stock market in China (up 0.5%), major Asian stock markets have opened the day on a negative note. Stock markets in Taiwan (down 1.7%) and Hong Kong (down 0.8%) are the top losers in the pack. Major stock indices in Europe ended their previous session in green. However stock markets in US ended their previous session down by 0.3%. The rupee is trading at 65.67 per US dollar.

Indian stock markets have opened the day in green. BSE-Sensex is trading higher by 70 points (up 0.3%) and NSE-Nifty is trading higher by 23 points (up 0.3%). However, S&P BSE Midcap and S&P BSE Smallcap is trading marginally higher by 0.02% and 0.2% respectively. Major sectoral indices have opened the day on a mixed note. Stocks from information technology and pharmaceutical sector are witnessing buying interest. However stocks from capital goods and metal & Mining are facing maximum selling pressures.

Tata Steel reported its results for the quarter ended September 2015. The revenues of the company fell by 18.1% on a YoY basis. The revenues were impacted due to higher demand of cheaper Chinese imports. Further, company reported an operating loss from its European operation. The European operations reported a loss of Rs 1.4 bn at the Earnings Before Interest, Tax, Depreciation and Amortization (EBIDTA) level. Tata Steel has reduced the headcounts and shut down some of its plants in Europe owing to weak demand.

The operating profits fell by 79% to Rs 4.6 bn. However, net profits of the company reported a growth of 22%. This was mainly on account of a one time gain from sale of its investment in the group companies. Reportedly, the company sold a part of its stakes in Tata Motors Ltd and Titan Co. for Rs.24.98 bn and Rs.7 bn respectively.

Recently, Rahul Shah, Managing editor of Microcap Millionaires, has discussed about how the valuations of commodity stocks have taken a beating on the stock market. He also compares the likes of the commodity stocks to that of the FMCG sector which is trading at expensive valuations. So which pack would you prefer? Click here to know about his views...

As reported in a financial daily, the much needed power reforms for State Electricity Board (SEB) were announced yesterday. The scheme is termed as' Ujwal Discom Assurance Yojna' (UDAY). Under the scheme, state government will take 75% of the debt on the books of the SEBs as on 30th September 2015. Reportedly, transferring of the loans to state government will reduce the interest burden from as high as 14% to around 9%.

The Public Sector Bank (PSB) are also enthused by the new reforms as some of them have huge exposure to the said sector. The portion of the debt lent to the SEBs will be converted into bonds of the State Government. The sovereign bonds of the State Government will provide adequate security to the banks for recovery of their lending's.

The reforms comes at a time when SEBs were facing losses to the tune of Rs 3.8 tn and were not in a financial position to enter into long term Power Purchase Agreement (PPA). This move will definitely revive the entire sector.