Indian Markets Monday Wrap-Up: Mid and Small Caps Buck the Trend

The Indian markets gave up the huge gains they had registered during the second half of today’s trading session, and closed on a flat note as selling activity intensified during the fag end. The BSE Sensex and NSE Nifty ended higher by around 10 points each. However, the stocks from the BSE mid-cap and BSE small-cap indices ended strong, up by around 1.2% and 1.5% respectively. Buying activity was witnessed in stocks from the metal, realty and banking spaces, while stocks from auto and software spaces ended on a negative note. The overall advance to decline ratio was poised at 1.7 to 1 on the BSE.

Most of the other Asian markets ended the day on a weak note. The European indices are currently trading in the green. The Rupee was trading at 48.15 against the US Dollar at the time of writing.

As per a leading business, realty majors, DLF and Unitech plan to restart some of their Mumbai based projects, which were earlier halted on account of poor demand and liquidity problems. DLF has restarted construction at NTC mill in Lower Parel on a 17.5 acres land. The company has re-planned to develop largely commercial establishments along with residential apartments from its earlier plans for a retail-cum-entertainment centre. Unitech, on the other hand, has a number of slum redevelopment projects and plans to focus on the development of affordable housing in the city. It may be noted that both companies of late are trying to resolve their liquidity problems. DLF has raised US$ 800 m through a stake sale, while Unitech has raised US$ 325 m through institution placement. Both, DLF and Unitech ended the day higher, along with their peers.

As per a leading business daily, software majors are eyeing a huge government’s IT spend of Rs 400 bn over the next few years. The government is looking for a roadmap for IT-enabled services in order to roll out some critical applications for establishing common service centers. The projects along with the Unique Identification Authority of India are among the series of IT transformation activities. With this, the government plans to maintain a common national database for various records. Infosys (INFY) already expects around US$ 1 bn of projects from the Indian markets, while TCS, Wipro (WIT) and HCL Tech are ramping up their capabilities in order to address this opportunity. This huge government spending will help Indian software companies which were under pressure due to the lower IT spending in the developed markets in the wake of the global economic slowdown. Software stocks ended the day on a mixed note.

The prime minister’s economic advisory committee expects the Indian economy to recover after September and expects it to expand by 7% during the current fiscal. However, the committee believes that economic growth may be affected if the monsoon is weak. It also believes that high bank lending rates continue to affect domestic demand. However, the central bank has estimated GDP growth at 6.5% during FY10.