Indian Markets Tuesday Wrap-Up: India Flat as Asia Gains

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 |  Includes: EDS, EPI, IBM, IFN, IIF, INFY, SAY, TLSYY
by: Equitymaster

The Indian markets lost a chunk of their gains during the final hour of trade on account of profit booking. However, they managed to close above the dotted line. The BSE-Sensex closed with gains of around 50 points, while the NSE-Nifty ended flat. However, stocks from the mid-cap and small-cap space ended the day in the red. Selling activity was witnessed in stocks across sectors, although some stocks from the banking and realty space found favour.

Most other Asian markets closed on a firm note. The European indices are currently trading mixed. Rupee was trading at 50.6 against the US dollar at the time of writing.

Software stocks ended the day on a weak note led by Patni Computers and Tech Mahindra. As per a leading business daily, Infosys (NYSE:INF) has won an outsourcing contract worth about US$ 80 m to US$ 100 m from Telstra (OTCPK:TLSYY). It is believed that Telstra has scrapped IBM Global Services’ (NYSE:IBM) multi-million dollar applications support contract and now has handed it to Infosys. Amidst the economic slowdown, Telstra is consolidating its vendors to reduce its IT service providers from four (EDS, IBM, Infosys and Satyam (SAY)) to two. Infosys’ capabilities and its good track record with BT has helped it in winning Telstra’s confidence. This contract would help the company increase its revenue share in the telecom segment and would also help strengthen its presence in the region. It may be noted that during 3QFY09 Infosys derived around 9% from the rest of the world segment.

Energy stocks ended the day on a mixed note with HPCL and BPCL ending firm, while Petronet LNG and Gail ended weak. As per a leading business daily, Reliance Industries is likely to sign a gas sale and purchase agreement with fertiliser companies in a few days. It is believed that the RIL’s KG basin gas of over 15 million standard cubic metres per day will be sold to about 12 fertiliser companies on priority. It may be noted that power and fertiliser companies are given the top slot in the national gas utilisation policy.

As per a leading business daily, India has witnessed an 11% power shortage during the eleven month period ending February 2009. A major shortfall of around 16% was experienced in the western regions including Maharashtra and Gujarat. Peak electricity generation lagged by almost 14% for the country during the same period under consideration. This can be attributed to the under utilisation of power plants on account of fuel shortage. It may be noted that many coal-based power plants are facing coal shortages, with inventory levels of few days or even less as compared to the industry norm of 15 days. It may be noted that with huge capacities lined up for the next couple of years, many power generation companies have been aggressive in acquiring coal mines abroad in order to assure the required supply.