Realty, energy pull markets lower

Fri, 18 Dec 02:30 pm

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Strong selling activity led the Indian markets to drop into the red during the past half hour. Selling activity is being witnessed in stocks across sectors led by realty, energy, FMCG and banking. However, stocks from the healthcare, auto and consumer durables sectors have still managed to find investors' interests as their respective indices are trading in the green. Currently, the overall decline to advance ratio is poised at 1.2 to 1 on the BSE.

The BSE Sensex and NSE Nifty are currently trading in the red, down by 140 (0.8%) and 45 points (0.9%) respectively. The BSE-Midcap has followed suit and is currently trading lower by about 0.5%. However, the BSE-Smallcap Index is trading flat. The rupee is trading at 46.84 to the dollar.

Engineering stocks are currently trading weak led by Punj Lloyd, Crompton Greaves and Cummins India. Wind energy equipment manufacturer Suzlon Energy today announced that it has paid back US$ 780 m (approximately Rs 37 bn) of the loans which it had taken to acquire Hansen Transmission. Hansen is a Belgium based company which is involved in the business of manufacturing gear boxes. By paying this amount back, the company has supposedly reduced its debt on books by about 15%. Ironically, the funds used to repay this debt were raised by selling stake in Hansen. This process was done last month. In addition, the company has also taken a US$ 465 m (about Rs 22 bn) loan from State Bank of India. As per the management, this transaction has concluded the first phase of the company's refinancing exercise.

It is reported that this move has resulted in a US$ 350 m (about Rs 17 bn) debt reduction in the company's books. As per the company's management, Suzlon is continuing to work towards optimizing its capital structure. Considering that the company had a high debt burden on its books, this is a positive development for the company.

Auto stocks are currently trading mixed with Tata Motors, Hero Honda and M&M trading firm, while Bajaj Auto and Maruti Suzuki are trading lower. The stock of Tata Motors is currently the top gainer on the BSE-Sensex. This is on the back of news of the company reporting strong global sales numbers for the month of November 2009. The company reported a 62% YoY increase in total global vehicle sales during the month of November. The total sales volumes stood at 75,775 units. Global sales include those of Tata branded vehicles, Jaguar, Land Rover and Tata Daewoo and Hispano Carrocera range of trucks and buses.

As per the company, domestic auto sales during the month of November stood at 54,108 units, which was higher by about 66% YoY as compared to November 2008. Commercial vehicles sales increased by 81% YoY to 33,338 units, while those of passenger vehicle increased by about 50% YoY to 42,437 units. However, investors also seemed to be cheering the recovery of sales of its JLR brand. JLR together reported a growth of 30% YoY in sales volumes during the month. The total number of volume sales of its JLR brand stood at 18,825 units.