Capital goods stocks drop
DATE: 20/09/2012
Key benchmark indices
weakened after recovering to hit fresh intraday high in mid-morning trade as
weak Asian stocks weighed on sentiment adversely. Political crisis following
Trinamool Congress, a key UPA ally's decision to withdraw its support to the government
also weighed on sentiment. The barometer index, BSE Sensex, was down 87.21
points or 0.47%, up about 120 points from the day's low and off close to 35
points from the day's high. The market breadth was negative. Index heavyweight
and cigarette maker ITC trimmed intraday gains. Another index heavyweight
Reliance Industries (RIL) trimmed losses in volatile trade. Capital goods
stocks declined on profit booking after recent gains. Metal stocks declined as
global metal prices fell today, 20 September 2012.
The market trimmed
losses after a weak start. It once again trimmed losses after weakening in
morning trade. It weakened after recovering to hit fresh intraday high in
mid-morning trade.
Asian stock markets
retreated Thursday, failing to hold on to monetary-easing inspired gains from
the previous session, with energy firms declining along with U.S. crude
futures.
Political worries
heightened after ruling Congress party on Wednesday said it won't reverse a
controversial decision to allow foreign supermarkets to invest in India as part
of other market-opening measures. But it may be willing to make some
compromises, including partially rolling back recent diesel-price increases and
limits on subsidized gas.
The measures, part of
a package unveiled last week in a gesture to regain investor confidence, caused
a government ally, the Trinamool Congress, to threaten Tuesday to pull its
support from the coalition by the end of this week. Trinamool, on whom Congress
depends for its majority in Parliament, says allowing foreign retailers like
Wal-Mart Stores Inc. and Carrefour SA to open supermarkets here will hurt
smaller Indian retailers.
Raising diesel prices
and reducing the supply of low-cost gas, the party argues, hurts India's poor,
who spend a higher percentage of their income on fuel. Trinamool's head, Mamata
Banerjee, who is also chief minister of West Bengal state, vowed Wednesday to
continue to oppose letting foreign supermarkets come to India. Ms. Banerjee had
set Friday as the deadline to pull her ministers from the government to allow
"a window for compromise." Congress can survive for now without Ms.
Banerjee's support as Parliament isn't in session. But the government could
face a no-confidence vote in December, when the legislature reconvenes.
The government last
week announced liberalization of foreign investment rules in retail, aviation
and broadcasting sectors. While the government has allowed up to 51% foreign
direct investment (FDI) in multi-brand retail trading (MBRT), in the aviation sector
the government has allowed foreign airlines to acquire up to 49% stake in
Indian carriers.
At 11:20 IST, the BSE
Sensex was down 87.21 points or 0.47% to 18,408.80. The index plunged 204.08
points at the day's low of 18,291.93 at the onset of the trading session, its
lowest level since 14 September 2012. The index dropped 52.09 points at the
day's high of 18,443.92 in mid-morning trade.
The S&P CNX Nifty
was down 27.45 points or 0.49% to 5,572.60. The index hit a high of 5,581.35.
The index hit a low of 5,534.90 in intraday trade, its lowest level since 14
September 2012.
The market breadth,
indicating the overall health of the market, was negative. On BSE, 1308 shares
fell and 997 shares rose. A total of 106 shares were unchanged.
From the 30-share Sensex
pack, 18 stocks fell and rest of them rose.
Index heavyweight and
cigarette maker ITC rose 0.08% to Rs 254.30. The stock had scaled a record high
of Rs 272.50 in intraday trade on 14 September 2012.
Index heavyweight
Reliance Industries (RIL) declined 1.06%. RIL has bought back 3.9 crore shares
for about of Rs 2793.51 crore till 4 September 2012 under its ongoing share
buyback program. RIL has set maximum buyback price of Rs 870 per share. The
company has set aside Rs 10440 crore for share buyback. The buyback program
opened on 1 February 2012 and closes on 19 January 2013. RIL chairman Mukesh
Ambani said at the company's Annual General Meeting in June 2012 that the
company's buyback program represents a highly accretive use of cash by the
company and it will supplement earnings growth from operations, for higher EPS
(earnings per share), in the near future.
Capital goods stocks
declined on profit booking after recent gains. L&T declined 1.89%. The
company during trading hours on Friday, 14 September 2012, said it has
restructured its IT and L&T Integrated Engineering Services businesses with
a view to accelerate growth in the technology space. L&T Infotech has been
reorganised around two business clusters, "industrial" and "services".
L&T Integrated Engineering Services (IES) will be rebranded as L&T
Technology Services. As a part of this strategy, three US-based professionals -
Keshab Panda, Mukesh Aghi and Vivek Chopra will join as directors on the
L&T Infotech board. L&T believes this restructure will help the company
in growing these businesses, the company said in a statement.
Among other capital
goods stocks, BEML, Bhel, ABB, Thermax and Siemens declined by between 0.78% to
3.2%.
Metal stocks declined
as global metal prices fell today, 20 September 2012. Sterlite Industries,
Bhushan Steel, JSW Steel, Tata Steel, Sail, Hindalco Industries, and Hindustan
Zinc shed by between 0.35% to 2.31%.
+POWERED BY: CAPITAL MARKET NEWS
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