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Buying interest in select banking, engineering and realty behemoths helped the indices in Indian share markets to bounce back into the positive territory in the final hours of trade today. The indices surged higher in the final hour of trade and ultimately closed near the day's high. While the BSE-Sensex closed higher by around 136 points, the NSE-Nifty closed higher by around 44 points (up 0.9%). The smaller indices too managed to gain momentum in the latter half of the session. Both the BSE Mid Cap index and the BSE Small Cap index closed nearly 0.8% higher.

As regards global markets, most Asian indices except those in India and Japan closed lower today while European indices have also opened lower. The rupee was trading at Rs 56.43 to the dollar at the time of writing.

According to international ratings agency Standard and Poor's (S&P) about half of the 48 companies that have Foreign Currency Convertible Bonds (FCCBs) maturing in the rest of 2012 may go for restructuring. Also refinancing would be difficult in current market conditions and investors may not opt to take the judicial route for recoveries in case of defaults. While only five of such companies are placed well enough to pay off their FCCB debt, about 28 others will have to roll over the bonds with higher coupons or lower the conversion-to-equity price or get bondholders to accept only a partial repayment of their principal.

Further, the rupee depreciation has added to the FCCB holders' woes. Most of the FCCBs that mature in 2012 were issued in 2007-08, when the rupee was at about Rs 42 per dollar. The rupee has lost more than 30% against the greenback since then. This would add about US$ 2 bn to the value of FCCB maturities in 2012. Companies may have to shell out additional interest of US$ 700 m a year in case they manage to refinance the US$ 5 bn of FCCB debt maturing in 2012. The Reserve Bank of India (RBI) has allowed companies to take the external commercial borrowing route to redeem FCCBs. Loans from Chinese banks could come to rescue but only for companies in the power and infrastructure related sectors that have import-related relationships with the country's manufacturing companies.

Textile stocks ended the day on a positive note led by Vardhaman Textiles, Bombay Dyeing and Raymond. Reliance Industries (RIL), which has a small presence in the textile arena, was the top underperformer amongst stocks forming part of the BSE-Sensex today. Losses in RIL were seemingly on account of reports of the company planning to sell its oldest business of textiles. This sale will include its well established brand 'Only Vimal' as well. It is believed that the company is selling this brand to sweeten the deal. This move it believed to be part of RIL's strategy to exit loss making businesses. The transaction is expected to be completed by the end of the year.

The textile business contributes to a miniscule 2.3% to the overall revenues of Rs 850 bn of RIL. It may however be noted that the company has not officially made a statement regarding this transaction. It is believed that RIL top management is not happy with the frequent trouble relating to labour at its factories. Its unfavourable views towards the industry were also expressed in the latest annual report, wherein it is mentioned that the textile industry on the whole was impacted due to volatile cotton markets.

Source: India Markets Thursday Wrap-Up: Indian Share Markets Buck The Trent