Indian Markets Wednesday Wrap-Up: Flirting With the Dotted Line

by: Equitymaster December 03, 2008 | about stocks: EPI / IFN / IIF    

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The Indian bourses witnessed extreme volatility throughout the day. To that extent that the indices flirted with the dotted line over 20 times today, to finally end the day almost flat. While selling pressure was witnessed across sectors, stocks from the IT and energy sectors led the pack of losers. As regards global markets, while the Asian indices closed in the green, the European markets are trading in the negative zone currently.

The BSE Sensex closed 25 points lower, while the NSE Nifty closed lower by 10 points. The BSE Midcap index closed higher by 0.9% and Smallcap index closed higher by 0.4%. The rupee was trading at 50.02 to the dollar.

Alternate bouts of buying and selling activity were witnessed throughout the day today. The overall market breadth was positive with gainers outnumbering losers by a ratio of 1.2 to 1 on the BSE. While Tata Steel (up 11%) and Maruti Suzuki (up 7%) led the pack of gainers on the NSE Nifty today, Wipro (down 5%) and Infosys (down 4%) led the pack of losers.

As per a leading business daily, RIL has suspended operations at four units at the Vadodara petrochemicals facility in Gujarat. The company recently stopped operations of Acrylic fibre, acrylo nitrile, PVC and LAB plants in the complex. The sharp dip in demand for petrochemical products and the resulting inventory buildup have been the major reasons that have forced RIL to restrict production below capacity. The prices of the petrochemical products have declined nearly 60% in the last few months. This would affect the margins of the company in near term.The stock of RIL ended lower by 1%, while its peer HPCL ended flat.

At a time when the construction industry is facing a severe slack in demand, Alok Industries is planning to raise further debt for its subsidiary Alok Infrastructure in the current financial year. The company has tied up Rs 3 bn as debt for the project and has sought an additional Rs 5 bn from banks. It is also seeking to have PE investments to the tune of Rs 3 bn for the same. It may be noted that at the end of September 2008, Alok had Rs 59 bn of debt on its books, of which Rs 30 bn was TUF (low cost) debt. Thus the company would be taking on additional risk with its plans of adding more debt to its books in the current scenario of high interest rates. The stock of Alok Industries ended lower by 2%.

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