Markets slip into the red

Tue, 15 Dec 12:30 pm

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After a strong start, key indices slipped into negative territory during the preceding two hours of trade. While buying activity is being witnessed in stocks from the pharma and FMCG sectors, stocks from banking and auto sectors have failed to elicit sufficient investor interest and are seeing declines currently.

While the BSE Sensex is currently trading lower by around 35 points, the NSE Nifty is trading lower by about 15 points. Stocks from the midcap and smallcap space are trading mixed with the BSE Midcap index trading lower by 0.1% and the Smallcap index trading higher by 0.1%. The rupee is trading at 46.63 to the US dollar.

Wind turbine major Suzlon is looking to refinance its large debt burden. As per a leading business publication, the company plans to complete US$ 2.8 bn of refinancing by the end of January 2010. Suzlon is looking at consolidating its short and long term loans, working capital and other borrowings into a single loan. This loan has already been agreed by SBI and IDBI Bank which will be the lead banks in the deal.

Another 25 banks are slated to join the group within the next 45 days as per the company’s management. Interestingly, the company’s top management is of the view that with a very strong support for the Copenhagen meeting and a very clear road-map from political leaders across the world, the company can deliver US$ 50 bn of yearly revenues by 2020. Successfully completing the refinancing of its debt burden will most likely help the company reschedule its repayment obligations, giving it some much needed time to payback its lenders at a time when its business functioning below breakeven due to sluggish sales. The stock of Suzlon is trading lower currently.

In an unexpected move, telecom regulator TRAI is planning change the rules in the telecom industry, wherein operators would have to start presenting a business case each time they come out with a tariff package. Only once the regulator is convinced the new tariffs are profitable would they be approved. This is in contrast to the status quo in the past wherein operators did not require prior approval for tariff packages, but were left to market forces. As per a leading business publication, TRAI has already begun work on examining tariff packages and the regulator will soon invite companies to present their business case. It may be noted that the exercise will also cover existing tariff packages. TRAI is doing this with the intention of ensuring the long term health of the telecom sector and its attractiveness to investors. This will come as relief to established players like Bharti Airtel who have been nervous about the predatory pricing that many new entrants in the industry have resorted to. Telecom stocks are trading in the red currently.