Final hour surge

Mon, 13 Dec Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

After a rather volatile outing for most of the session today, strength in select stocks from the commodity and real estate sectors in the final hour helped the Indian indices close firmly in the positive. While the BSE Sensex closed higher by around 183 points (up 0.9%), the NSE Nifty gained around 51 points (up 0.9%). The BSE Midcap and the BSE Smallcap gained around 1.7% and 2.0% respectively. Most of the sectoral indices closed in the green with the BSE FMCG index being the sole loser.

As regards global markets, Asian indices closed mainly in the positive today, with China leading the pack of gainers. European indices have also opened in the green. The rupee was trading at Rs 45.17 to the dollar at the time of writing.

While reports of promoters, particularly those of smallcap companies, rigging their share prices have cast a shadow on the integrity of these companies, it seems that not all of them belong to the same breed. As per a business daily, in the past week, which saw nearly half of the constituents of the BSE Smallcap index visiting their lower circuits, several promoters have been big buyers. Given an opportunity to buy a larger pie of their business at a cheaper rate from the open market, promoters of 50 companies have bought 11.4 m shares worth Rs 750 m in the past week. This indeed is an encouraging sign for investors looking for managements who believe in the long term potential of their businesses. Having said that investors cannot compromise on verifying the long term track record and execution abilities of the management.

The recent increase in crude oil prices are expected to boost the earnings of upstream oil companies in India. This would be in spite of an increasing subsidy burden on these companies, due to the rising under recoveries of oil marketing companies (OMCs). As per a business daily, the spike in crude oil prices has led to an increase of about 8% in gross realisation compared to the second quarter. These companies may improve their net realisation (after bearing subsidy) by close to US$ 2 per barrel if their subsidy burden remains at one-third. OMCs do not lose on sale of petrol since the government decontrolled its price in June 2010. Currently, OMCs are incurring underrecovery (revenue loss) of Rs 4.1 per litre on diesel, Rs 16.88 per litre on kerosene and Rs 272 per cylinder on domestic LPG.

The Indian basket of crude oil has averaged around US$ 83 per barrel in the current quarter, up 10.8% from US$ 74.9 in the previous quarter. However, the price of diesel, kerosene and liquefied petroleum gas, that together account for 60% of petroleum products' consumption, has not been increased. Petronet LNG, GAIL and MRPL were the lead gainers in the sector today.

Sintex Infra Projects, a subsidiary of Sintex Industries, has acquired 30% stake in Durha Constructions (DCPL), which is engaged mainly in business of civil construction and mechanical construction. The company works in varied infrastructure sectors including power, petrochemicals, cement from medium to large projects in both private and public sectors. The details with regard to the price of acquisition are yet to be divulged. Sintex's order backlog in the plastic business (90% of its total sales) stood at around Rs 26 bn in 1HFY11. The same is to be executed over the next 20-21 months. The other sub-segment of the plastics business – custom molding – grew by 24% YoY during 2QFY11.