India Markets Monday Wrap-Up: India Tops Asian Losers

by: Equitymaster

The Indian stock market indices had a weak outing today. Markets started off in the green, however mid-session they moved into the red zone. Persistent selling in index heavyweights caused the indices to close in deep negative territory. While the BSE-Sensex closed lower by around 296 points (down 1.5%), the NSE-Nifty closed lower by around 95 points (down 1.6%). The BSE Midcap and BSE Small cap were at the receiving end as well as they closed lower by 1.3% and 0.8% respectively. Realty and IT stocks weighed heavy on the indices.

In regard to global markets, Asian indices mainly closed in the red today, with the exception of China. India was one of the top losers in the region. The European indices opened on a weak note. The rupee was trading at Rs 44.42 to the dollar at the time of writing.

Meanwhile, the Tata Group is expected to invest up to Rs 1.2 trillion (U.S. $ 27 bn) in the domestic market over the next five years. It has already invested Rs 700 bn in various businesses over the past three years. It is expected to more than double sales over the same period, to U.S. $150 bn. This Indian conglomerate is the majority stakeholder in a number of companies. All of these are leaders in their respective fields, e.g. TCS, Tata Motors (NYSE:TTM), Tata Steel, etc. The investments it plans to make will be in power, steel, automobiles, telecom and chemicals. Around half of its planned investment will be made by Tata Power over the next five years.

Aditya Birla Chemicals, part of the Aditya Birla Group, acquired the chloro chemicals division of Kanoria Chemicals & Industries for Rs 8.3 bn (U.S. $187 m) in an all-cash deal. Aditya Birla Chem. is buying this unit in order to boost its production capacity. This deal will make ABG the country's largest producer of chlor-alkali. This is a critical input used in the aluminium sector.

Kanoria Chemicals plans to use the funds realized from the transaction in expanding its other business. It also plans to seek opportunities in new business through the organic growth or inorganic route and invest in new technologies. The CCD is located at Renukoot, Uttar Pradesh. The current annual capacity of caustic soda at the facility is 115,000 tonnes per annum (tpa). Out of its total supply, 90,000 will be supplied to Hindalco. The total assets acquired include a captive power plant and 900 acres of leasehold land. In a negative market, Aditya Birla Chemicals closed up by over 3%. Mid-cap stock Kanoria Chemicals, on the other hand closed 20% higher.