Mid-cap and small-cap buck the trend

Wed, 30 Dec 12:30 pm

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Unabated selling activity in index heavyweights pushed the benchmark indices below the dotted line during the previous two hours of trade. Currently, selling activity is being witnessed across sectors led by stocks from the metal, oil & gas, banking, and FMCG sectors. However, realty, consumer durables, IT and telecom sectors are managing to garner investors' interest.

The BSE-Sensex is trading down by around 55 points and the NSE-Nifty is down by around 15 points. However, midcap and small cap stocks have managed to buck the trend. Currently, the BSE-Midcap and BSE-Smallcap indices are trading up by 0.45% and 0.95% respectively. The Rupee is trading at 46.73 to the Dollar.

As per a leading business daily, engineering major BHEL is in talks with China's largest manufacturer of high-voltage transformers Tebian Electric Apparatus Stock Co. Ltd (TBEA) to jointly manufacture equipment in India. If successful, this deal would lead to the first India-China public sector initiative in power equipment manufacturing. While BHEL has the capacity to make transformers of up to 400 kV, TBEA manufactures electric power transformers of up to 1,000 kV. A collaboration with TBEA will enable BHEL to compete with companies such as Siemens and ABB in the high-voltage segment. It may be noted that BHEL is looking to bag orders for building power transmission links across India and has been in talks with Japan's Toshiba Corp. to form a JV. The company plans to capitalise on a surge in demand for transmission equipment that is expected to emerge with the country's incremental power generation capacity that is expected to come up going forward. However, the transformer business currently contributes a small part - roughly 4% - to the company's overall revenues. BHEL is currently trading marginally lower on the bourses.

According to a leading business daily, Essel Propack (EPL), the world's second largest manufacturer of laminated tubes has sold its investments in the overseas medical device business. Essel Propack which is a part of US$ 2.4 bn Essel Group is expected to get over Rs 2 bn from its medical device business. It acquired the medical devices operations of Tacpro Inc USA and Avalon Medical Services Pte Ltd, Singapore in May 2006. The takeover was deemed strategic given EPL's polymer-based packaging business and higher grades of the same raw material being core to the catheters (for non-invasive surgery). This business had contributed 11% to total revenue in CY08. However the recent disinvestment is expected to rope in some cash for the company which has been lately restructuring its debt. Moreover, the decision is strategic in the sense that the company had been facing difficulties in sustaining profitability at its overseas operations. The stock is trading higher currently.