Flat with a negative bias

Tue, 28 Dec 01:30 pm

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Indian indices continued to trade flat while marginally dipping in the red during the previous two hours of trade. Currently, stocks from the healthcare and realty space are trading firm. However, stocks from the consumer goods and oil & gas space are trading weak.

Currently, the BSE-Sensex is trading lower by around 17 points, while the NSE-Nifty is down by about 7 points. The BSE Midcap index is also trading weaker by 0.14%. However, there has been some buying interest in small cap stocks with the BSE Smallcap index trading higher by 0.2%. The rupee is trading at 45.18 to the US dollar.

Engineering stocks are currently trading weak led by AIA Engineering, Bharat Electronics, Kalpataru Power and Crompton Greaves. A leading business daily has reported that power major NTPC and engineering major BHEL are scouting for equity as well as technology partner for their joint venture company NTPC BHEL Power Projects Pvt. Ltd (NBPPL). It is also reported that there will be a licensing agreement to import technology. It is believed that both the companies are open to selling about 26% stake each in the venture. At present, they hold equal stake in the JV. This venture was set up by the two companies to address the balance of plant equipment (BoP) market. It is believed this there are not many BoP equipment manufacturers in India at present and as such is a big market to cater to. NBPPL plans to set up a manufacturing facility by FY12 and plans to have power generation equipment with a yearly capacity of 5,000 MW by FY15.

Considering that this project will require an investment of Rs 60 bn, it is definitely a big ticket project. However, from the looks of it, it seems like a step in the right direction given that the demand for power equipment is burgeoning and that the current capacities are not able to cater to the overall demand.

Oil & gas stocks are trading weak with IOC, GAIL, HPCL and Chennai Petro leading the losses. However, Essar Oil and Petronet LNG are trading in the green. ONGC has proposed to increase its equity in government-owned Pawan Hans Helicopters to 49% from the present level of 21.5%, by infusing Rs 960 mn. After the equity infusion, the government's holding in the company will be diluted to 51%. ONGC has also agreed to give Pawan Hans a five-year loan of Rs 2.75 bn. The infusion is expected to happen by the end of the current financial year. In addition, another government-owned entity, NTPC, is proposing an investment of Rs 550 mn investment in the company, in return for services, not equity. Pawan Hans is the country's largest helicopter services company that provides support services to oil sector and tourism. It is expected to use the proceeds for fleet expansion.