Commodity,realty stocks boost markets

Tue, 8 Dec 02:30 pm

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Markets made further inroads into the positive territory during the previous two hours of trade as buying continued unabated across index heavyweights. While buying is being seen across the board, select stocks in the banking and healthcare sectors are bearing the brunt of profit booking.

The BSE-Sensex and NSE-Nifty are trading firm currently, up by around 200 points and 69 points respectively. The BSE-Midcap and BSE-Smallcap indices too are trading higher, up by around 0.84% and 1.0% respectively. The rupee is trading at 46.69 to the dollar.

As per a leading business daily, Indian engineering and power major L&T has won a Rs 8.4 bn deal from Nuclear Power Corporation of India (NPCIL) for its Kakrapar Atomic power project in Tapi. This is one of the single largest deals in the country's nuclear power sector.

L&T will be responsible for the construction of the reactor building, auxiliary buildings, waste management and exhaust ventilation building along with other civil, structural and architectural works. The project is expected to be completed in 49 months. It may be noted that this company has a rich experience of over 5 decades in operating in the nuclear power segment. It has the necessary expertise as well as in-house capabilities for constructing complex and critical structures. We believe timely execution of such a large sized order will further boost the growth of L&T's E&C (Engineering and Construction) segment which contributes around 84% of L&T's topline. This business grew by 14% YoY during 2QFY10. The stock of L&T is trading higher along with peers ABB and Siemens.

As per a business daily, auto major M&M will be launching its first truck under the joint venture (JV) with North America's largest commercial truckmaker, Navistar in January 2010. Mahindra Navistar Automotives (MNAL), the JV company, will be producing medium and heavy duty trucks above 25 tonnes and tractors and trailors above 49 tonnes range. It may be noted that M&M holds 51% stake in this JV that was formed in 2005. The commercial vehicle segment had witnessed a slowdown in FY09. The sales of trucks in the 16-tonne and above capacity declined by 38% YoY, while those in the tractor trailer segment fell by 60% YoY.

M&M aims at becoming a significant player in India's commercial vehicle market which has started to recover this quarter after witnessing fall for last three quarters. Also, Ashok Leyland and Tata Motors dominate the 16.6 tonne-plus medium and heavy commercial vehicle (CV) market, with a market share of over 90%. We believe that M&M needs to get a lot of things right in order to gain in-roads in this segment. It is worth noting that MNAL has invested Rs 12 bn for the same and also plans to raise Rs 5 bn to Rs 6 bn long-term debt from Indian banks in the next 3 to 6 months. M & M is trading in the red.