Stake Sales in India Controlled Companies

Mayank Mehta
21 Aug, 2009
New York City

Stocks in Mumbai rebounded after government plans to lower stake in state controlled listed companies and ask private companies to increase public float. The Cabinet raised debt ceiling to 4% for state government allowing additional $5 billion of borrowing.

[R]6:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai rebounded after government plans to lower stake in state controlled listed companies and ask private companies to increase public float. The Cabinet raised debt ceiling to 4% for state government allowing additional $5 billion of borrowing.[/R]

Stocks in Mumbai trading Sensex regains 15,000, Nifty above 4,500 as pivotals rally. Hindustan Zinc loses sheen on price cut. Wockhardt hardens after exiting animal health division.[/R]

The Sensex index in India increased 228.51 or 1.52% to 15,240.83 and CNX Nifty index rose 75.35 or 1.6% to 4,528.80. Among the Sensex 30 stocks, 28 advanced and 2 fell.

On BSE trading, 1,748 stocks advanced, 972 declined and 87 were unchanged.

The finance minister has approved the disinvestment plan that will allow state controlled companies to lower stakes beginning April 2010.

Government-owned and private companies in which the founders own more than three-fourths of the shares will be required to increase the public float by 5% annually until at least 25% of the shareholding is in the hands of the public.

The government today relaxed the borrowing limit of states to 4% of gross state domestic product for the current fiscal up from a previous ceiling limit of 3.5%. The Cabinet approved changes in the Debt Consolidation and Relief Facility guidelines which will enable states to borrow an additional Rs 21,000 crore in the current fiscal year.

Gainers & Losers

Adani Power closed almost unchanged from its issue price of Rs 100, after trading as high as Rs 107.90 and as low as Rs 98.50.

Pharmaceuticals makers declined after local media reports suggested that the government may open inquiry and fine companies for overcharging drugs.

Cipla plunged 1.63% to Rs 253.50, Ranbaxy Laboratories fell 1.59% to Rs 297.10, and Dr Reddy''s Laboratories dropped 1.09% to Rs 792.80, declined.

Axis Bank Limited rose 4.3% or Rs.36.35 to Rs.879.40 after Axis Asset management targets to be among top 10 asset managers in the country.

Bharat Heavy Electricals Limited surged 1.9% or Rs.44.90 to Rs.2,296.00 after the power infrastructure company secured contract worth Rs.26,300 Million for installing 2 sets of 525 MW power plants in Orissa.

Bharti Airtel Limited rose 2.3% or Rs.9.45 to Rs.409.50 after the provider of telecommunication services and South Africa`s MTN Group have extended their exclusive discussions until Sep. 30, 2009. The talks were extended for the second time as several large investors are asking for higher price.

Compact Disc India Limited the animation company fell 2.3% or Rs.1.65 to Rs.68.95.

Emco Ltd jumped 3.8% or Rs.3.20 to Rs.86.80 after the power equipment maker recent sale of its unit Emco Energy does not signal a shift from the generation space, instead it has lined up larger plans for the segment, a top company official said.

Flawless Diamond (India) Limited, the diamonds and jewelry maker rose 0.9% or Rs.0.30 to Rs.32.50.

Geometric Ltd surged 1.6% or Rs.0.75 to Rs.46.20 after the company released new visualization products.

Greenply Industries Ltd an interior infrastructure company rallied 3.9% or Rs.4.70 to Rs.125.30.

Hindustan Zinc Limited decreased 0.1% or Rs.0.15 to Rs.707.95 after the mining and smelting operations after zinc makers lowered spot prices.

Housing Development Finance Corporation Limited rose 0.9% or Rs.18.65 to Rs.2,410.00.

ICICI Bank Limited added 3.6% or Rs.26.20 to Rs.745.65 said it could make initial public offerings in four subsidiaries or sell stake in its insurance ventures after the government permits higher foreign investment limit in the sector.

Indiabulls Real Estate Ltd rose 9.7% or Rs.22.75 to Rs.257.20 after the company makes a bid for Mantralaya.

McNally Bharat Engineering Company Ltd added 4.6% or Rs.7.55 to Rs.170.00 after the company agrees to buy KHD Humboldt coal and minerals business and its manufacturing facility in Cologne, Germany.

MSP Steel & Power Ltd climbed 4.9% or Rs.1.40 to Rs.29.95 after the maker of iron and steel products plans to issue preference shares up to Rs.120 crores.

Nestle India Limited the food business advanced 1.4% or Rs.32.95 to Rs.2,240.00.

Omaxe Limited surged 3.5% or Rs.3.65 to Rs.105.65 after the real estate developer has received approval for layout plan from Mathura Vrindavan development authority, Uttar Pradesh.

Oil & Natural Gas Corporation is gearing up for gas production at India’s first underground coal gasification project on a pilot basis near Surat, Gujarat. The field is expected to produce about 5.5 lakh cubic meters of synthetic gas per day by end of 2010.

State Bank of India rose 1.3% or Rs.23.15 to Rs.1,776.75 after the largest lender plans to add 1,000 branches this year.

Sundram Fasteners Limited rose 2.6% or Rs.0.90 to Rs.35.35 after the manufacture of auto components said it is looking to diversifying into non-auto sector.

Unichem Laboratories Limited jumped 5.3% or Rs.11.30 to Rs.223.00.

Wockhardt Limited rose 1.1% or Rs.1.85 to Rs.161.25 after the pharmaceutical company completed the divestment of its Animal Health Division to Vétoquinol, France.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 145.21 or 1.40% to 10,238.20, Hang Seng index in Hong Kong decreased 129.84 or 0.64% to 20,199.02 and CSI 300 index in China higher 59.23 or 1.88% to 3,203.62. ASX 200 index in Australia decreased 86.90 or 1.99% to 4,290.60. The FTSE Bursa KL Composite index in Malaysia closed higher 0.36 or 0.03% to 1,163.79.

The Kospi Index in South Korea increased 4.59 or 0.29% to close at 1,580.98. SET index in Thailand closed higher 3.65 or 0.57% to 644.63 and JSE Index in Indonesia increased 5.26 or 0.23% to 2,333.90. The Sensex index in India increased 228.51 or 1.52% to 15,240.83.