Stocks in India Fall; Ranbaxy, Bharti Drop

123jump.com Staff
26 May, 2009
New York City

Stocks in India declined on worries of rising government deficit and inflation. Investors worry that recent 8,000 crore rupees offering from real estate companies may dry liquidity in the market. Chief executive and family board members of Ranbaxy Laboratories resigned.

[R]7:00 PM Mumbai, 8:30 AM New York – Stocks in India declined on worries of rising government deficit and inflation. Investors worry that recent 8,000 crore rupees offering from real estate companies may dry liquidity in the market.[/R]

Mumbai stocks declined after investors worried that government stimulus will surge the government debt and rekindle inflation. Also, recent surge in rights offering and capital raising from the real estate companies will soak liquidity from the market.

Real estate developers Indiabulls, DLF and Unitech have raised 8,000 crore rupees and at least 120 companies are looking to raise 40,000 crore rupees in public offerings.

Indiabulls in a filing with the BSE stated that Morgan Stanley has acquired 7.7% stake in the company for 570.2 crore rupees. Earlier the company has said that it plans to sell 14.4 crore shares at 185 rupees a share and raise 2,656 crore rupees or $550 million.

The Sensex index in India decreased 323.99 or 2.33% closed to 13,589.23 and the CNX Nifty index declined 2.9% or 120.85. For the year benchmark indexes are up just above 40%. Of the stocks in Sensex index, 26 increased and 4 declined.

Trading volume on the BSE declined to 6,893 crore rupees. In trading, 1,231 increased, 1,449 decreased and 32 were unchanged.

The rupee declined to 47.62 against a dollar from 47.28.

Gainers & Losers

Bharti Airtel declined 5.7% to 771.20 rupees after investors worried that a proposed merger with South Africa based MTN will dilute earnings in the first year. The merged companies are expected to have revenue of $20 billion and 200 million subscribers.

In a complex transaction, MTN will acquire 36% of Bharti and Bharti will take 49% stake in the company before full merger of two telecom operators.

Talks of partial liberalization of petrol and diesel prices dragged auto stocks lower. Maruti Suzuki India, Hero Honda Motors, Tata Motors and Bajaj Auto declined.

Reliance Industries fell 2.3% to 2,144 rupees and ONGC declined 2.6%.

State Bank of India declined 1.9% and ICICI Bank fell 5.3%.

Realty stocks declined on profit taking after recent surge in the sector on Parliamentary election results.

DLF declined 4.3% to 336.90 rupees, Unitech Limited fell 5.6% to 72.80 and Indiabulls Real Estate dropped 3.7% to 198.20 rupees.

Ranbaxy Laboratories dropped 8.4% to 244.50 rupees after the company may not be able to supply key ingredient to AstraZeneca. The delay may cost the company in $50 million lost revenue.

Separately, the chief executive Malvinder Singh resigned from the company and family members resigned from the board on Sunday after Japanese drug maker took control of the management. Mr Singh term was supposed to run till 2013.

Atul Sobti will take over as chief executive for the next three years.

Earnings Review

Bank of Baroda, the provider of banking services in India said full-year total income rose 28% to Rs. 18,297.91 crore from Rs. 14,306.67 crore a year ago. Net profit for the year rose 54% to Rs. 2,384.08 crore compared to net profit of Rs. 1,548.38 crore a year ago.

Bank of Baroda, in the last one year traded as high as Rs.464.30 in May 2009 and as low as Rs.180.50 in March 2009. Based on the yesterday’s closing price of Rs.440.20 the company has market cap of Rs.160.35 billion.

NIIT Technologies Ltd, the global information technology (IT) solutions organization said fourth quarter revenues fell 9% to Rs.227.0 crore from Rs.248.5 crore a year ago. Net profit for the quarter fell 15% to Rs.26.3 crore compared to net profit of Rs.31.0 crore a year ago.

Revenues for the fiscal year 2008 rose 4% to Rs.979.9 crore from Rs.941.5 crore a year ago. Net profit for the year fell 15% to Rs.114.8 crore compared to net profit of Rs.135.3 crore a year ago.

NIIT Technologies Ltd, in the last one year traded as high as Rs.154.00 in May 2008 and as low as Rs.42.50 in March 2009. Based on the yesterday’s closing price of Rs.104.00 the company has market cap of Rs.6.11 billion.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 36.19 or 0.39% to 9,310.81, Hang Seng index in Hong Kong decreased 130.26 or 0.76% closed to 16,991.56, CSI 300 index in China lower 32.95 or 1.20% closed to 2,719.76. ASX 200 index in Australia increased 50.50 or 1.35% closed to 3,788.40. The KL Composite index in Malaysia lower 1.51 or 0.14% closed to 1,051.63.

The Kospi Index in South Korea decreased 28.86 or 2.06% to close at 1,372.04. SET index in Thailand closed lower 7.82 or 1.42% to 542.69 and JSE Index in Indonesia decreased 33.38 or 1.77% closed to 1,857.59. The Sensex index in India decreased 323.99 or 2.33% closed to 13,589.23.