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Indian stock market and companies daily report (August 18, 2010, Wednesday)

Contributed by Angel Broking

By Angel Broking

The benchmark indices opened firm, tracking the US index futures; however, they slipped into the red zone in mid-morning trade as index heavyweight Reliance Industries turned negative. The market remained positive in the afternoon trade, tracking European stocks, but closed the session marginally in red after remaining firm in the range-bound mid-afternoon trade. The Sensex and Nifty closed down by 0.1% each. However, BSE mid-cap and small-call indices outperformed the benchmark indices and closed with gains of 0.6% and 0.3%, respectively. Among the front liners, Hindalco, HDFC Bank, RCOM, HDFC and ITC gained 1–2%, while HUL, Reliance Infra., Sterlite Industries, ONGC and Tata Steel lost 1–2%. Among mid caps, United Breweries, Trent, Syndicate Bank, India Infoline and Havells India gained 7–10%, while KGN Industries, MVL, Gujarat Fluorochemicals, Hindustan Constructions and Cox and Kings declined by 4%.

Markets Today

The trend deciding level for the day is 18072/5422 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18117–18186/5436–5457 levels. However, if NIFTY trades below 18072/5422 levels for the first half-an-hour of trade then it may correct up to 18003–17958/5401–5387 levels.

Dr Reddy’s scouting for acquisition in Japan

As per media reports, Dr Reddy’s (DRL) is contemplating to buy stake in Japanese pharma companies in order to foray in Japan, the second-largest pharma market globally. DRL has narrowed its list to three players (Sawai Pharma, Fuji Pharma and Towa Pharma) and is expected to sign the deal in the near future. Japan holds great potential for global generic companies, as the government has introduced new policy and regulatory reforms to increase the generic drugs’ contribution from a relatively low 17% in CY2007 to 30% of prescriptions by CY2012. This is estimated to open up a US $10bn opportunity for global generic players in CY2012. We maintain our Neutral rating on the stock.

Sterlite’s proposed mining project faces hurdle

The NC Saxena panel, appointed by the ministry, recommended that Vedanta-owned Sterlite Industries will not be allowed to mine in Niyamgiri hills in the Kalahandi district in Orissa. The committee said that it would be illegal to allow bauxite mining operations in the Niyamgiri hills as the company has consistently violated the Forest Conservation Act, Forest Rights Act, Environment Protection Act and the Orissa Forest Act. One such violation related to the unauthorised expansion of capacity from 1mn tonne a year to 6mn tonnes and the panel said that the existing clearance for the refinery should also be cancelled. However, the environment ministry is likely to take a decision on the fate of Vedanta’s mining project in Orissa in a week. The Forest Advisory Committee (FAC) will be meeting on August 20 to consider recommendations of the expert panel. The FAC will submit its recommendations to the environment minister Jairam Ramesh, after which a final decision will be taken. We await for more clarity and mainta in a Buy on Sterlite with a Target Price of Rs228.

Economic and Political News
- July exports up 13.2% to US $16.2bn yoy, says trade secretary
- Centre to provide alternate blocks to Chhattisgarh coalfield
- PSU banks lent over Rs35,000cr to agri sector in 1QFY2011

Corporate News
- Bharti to invest US $10mn in Seychelles
- Elder Health inks deal with Pola for skincare products
- NTPC-BHEL JV looking for global technology partner