Indian Markets Monday Wrap-Up: Riding the Global Recovery Wave

With markets in no mood of giving up their gains, the indices traded in a narrow range during the closing hours of trade and this resulted in them closing in the black yet again. While the Sensex closed with gains of around 385 points (2.6%), Nifty edged higher by around 100 points (2.1%). The BSE mid cap and small cap indices also ended with gains, closing higher by 2.6% and 2.8% respectively. With the exception of ONGC, all the other Sensex stocks closed positive. Advance to decline ratio on the overall BSE also favored advances as they outnumbered declines by a ratio of nearly 3:1.

Asian indices were also in the grip of positive sentiment as most of them edged higher today while buoyancy is also being witnessed currently amongst European indices. The rupee was trading at Rs 48.6 to the dollar at the time of writing.

It was a hat-trick of sorts today for the markets as they were up for the third day in succession. And unlike last week, where both domestic as well as international factors played spoiler, this time around both had some positive stories to tell. Among local factors, drought seems to be the major worry and there was some sort of respite on this front as Bloomberg reported that monsoon deficit in drought struck northwest Indian states narrowed after rain made its comeback to the country’s biggest grain and sugar cane growing region after a two-week hiatus. This raised hopes of the rain persisting and lessening some of the damage. On the international front, advances in key Asian indices and assurances by Ben Bernanke that the world economy may be recovering albeit at a slow pace, also helped soothe some nerves and improve sentiments. Thus, in light of these favorable factors, both the key benchmarks in India managed to register strong gains.

With gains of 9%, troubled pharma major Wockhardt emerged as one of the top gainers in the Indian markets today. The gains were on the back of reports that Fortis Healthcare, a leading hospital chain has received approval from its board of directors for acquiring 10 of Wockhardt’s Hospitals at Bengaluru, Mumbai and Kolkata, with a total bed capacity of 1,902 for an undisclosed amount. Although it is being speculated that the deal size is in the range of Rs 10 bn to Rs 12 bn. It should be noted that Wockhardt is battling enormous debt on its balance sheet currently and hence, in order to restructure the same and bring it to more reasonable levels, the company is taking the extreme step of selling around 10 of its Wockhardt Hospitals. Interestingly, Wockhardt also had plans to list its hospital business some time back but due to poor market conditions had to put the same on the back burner. The company currently has 12 operating hospitals and plans to add three more by the end of the current fiscal. In other words, the company is not exiting hospital business completely but is actually selling a part of its business so that near term cash flow problems could be dealt with.

Domestic engineering behemoth L&T ended higher by a good 4% today. In addition to general optimism amongst Indian heavyweights, the gains also seem to be a result of the company bagging some fresh orders from a few Gulf countries. As per reports, L&T has bagged orders worth more than US$200 m (approx Rs 10.4 bn) for electrical projects in West Asia. While Rs 737 m worth of projects have flown in from Qatar Petroleum, the company has also bagged Rs 1 bn project from Dubai electricity and another one from Qatar. These fresh orders are likely to give a further boost to L&T’s order book position, which at the end of June quarter 2009, stood at a huge Rs 700 bn, including Rs 96 bn of international orders.

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