Mid-cap, small-cap stocks crash; Sebi begins probe
JP Morgan maintains 'buy' rating; says co 'turning the corner'

Money Feb 25, 2013

Sensex closes flat; Infosys up 3% on hopes of sops

By Firstbiz Staff

4:00 pm: The Indian stock markets ended flat today as investors refrained from taking long positions due to uncertainty surrounding the Budget.

The Sensex closed at 19331.69, up 0.08 percent and the Nifty at 5854.75, up 0.08 percent.

Information technology shares, however, led the gains, as investors expected the government to give tax incentives for exporters, a Reuters report said.

Mid-cap stocks also hogged the limelight today, with a dozen scrips in the segment nosediving towards the noon session.

According to a PTI report, mid-cap and mall-cap companies crashed, up to 60 percent in some cases, as investors resorted to panic selling on speculations of sale of pledged shares.

Stock exchanges and market regulator have begun probing any possible foul play, a senior official was quoted as saying in the report.

Investors have turned wary of the uncertainty that is surrounding the government finances.

Jim Walker of Asianomics in an interview with CNBC-TV18 warned against holding high hopes from the government this Budget. Expecting miracles or a big bang Budget could be a dangerous thing, he said. However, he is hopeful that the government will deliver on its promises of the last four-six months.

Stocks in news

Infosys was up 2.8 percent, as the market hoped the government to give incentives to the exporters.

NBFCs Mahindra & Mahindra Financial Services rose 0.7 percent, on hopes that the company may get banking licence.

Texmaco Rail and Engineering was up 2.7 percent ahead of the rail Budget tomorrow.

2:00 pm: Mid-cap shares started off on a strong note today but only to decline later, underscoring the risks attached to the segment.

According to a PTI report, mid-cap and mall-cap companies nosedived, up to 60 percent in some cases, as investors resorted to panic selling on speculations of sale of pledged shares. More than a dozen stocks crashed towards the noon due to the sell-off.

Stock exchanges and market regulator has begun probing any possible foul play, a senior official was quoted as saying in the report.

While the problems were limited to about 10-12 stocks initially, the panic selling was seen spreading to other companies from the sectors of affected stocks, the official added.

As per the stock exchange data, Core Projects was down 62 percent, Welcorp was down 25 percent, while Aanjaneya Lifecare, ABG Shipyard, Flexituff and Gemini Comm were down 20 percent each, the PTI report said.

Shares of Orbit Corp, Eros International Media, Opto Circuits, Saamya Biotech, Videocon Industries and Sanraa Media were also down by over 10 percent. Sources said that the mid-cap crash could have been triggered by huge sell orders placed by certain connected entities and the matter was being probed.

The BSE Midcap and Small-cap indices were down 1.33 percent each, although the benchmark Sensex was almost flat with a marginal decline of 0.09 percent at 19,300.45 points.

With input from PTI

Ranbaxy up 3% after co says it will produce Lipitor generic

1:00 PM Ranbaxy Laboratories surged after the company said it would resume production of a generic version of cholesterol drug Lipitor for sale in the United States.

"As part of the first step in initiating the manufacturing process to resume supplies to the US market, we have commenced the production of the drug substance for our atorvastatin product," the company said in a press release to the BSE.

Ranbaxy had in November recalled its atorvastatin from the US market and stopped manufacturing the widely used cholesterol lowering medicine after the company discovered contamination with tiny glass particles in certain lots of 10 milligram, 20 mg and 40 mg doses of the drug.

After the company's announcement, HSBC raised its rating on the stock to 'overweight' from 'underweight', Reuters reported.

HSBC added other factors behind its upgrade were share valuations after a recent correction, as well as the near-term catalysts such as the launch of additional generic drugs and the probability of a recovery in U.S. sales.

The stock was up more than 3 percent at Rs 426.50.

Texmaco, Kalindi Rail Nirman stocks up ahead of rail budget

11:30 am It is that time of the year when rail infrastructure related stocks witness investor interest. Not surprisingly, Texmaco is up 2.2 percent. Kalindi Rail Nirman is up just marginally.

There are hopes that the railway ministry will likely announce a few public private partnership projects.

Other stocks that are leveraged to railway investments are Larsen & Toubro, IVRCL Siemens and BHEL, according to Macquarie.

L&T undertakes track works, electrification and signalling, IVRCL track works, and Siemens does electrification, signalling, telecom, wagons and coaches.

BHEL also manufactures railway wagons and coaches.

However, L&T was down 0.7 percent and IVRCL 1.8 percent.

BHEL and Siemens, meanwhile, were up more than 1 percent.

Last year's Budget had pegged the plan outlay for FY13 at around $11 billion, based on the premise that a large chunk would be financed through internal revenue generation.

However, this figure was lowered to around $9.5 billion when the government realised it may not be able to achieve this year's revenue target. Media sources suggest that the ministry may propose a plan outlay of U$12.5 billion for FY14, which would be the highest railways have ever been allotted.

Of this, the railways would seek around $7 billion as budgetary support from the central government. Market borrowing is also likely to go up to around $3.5 billion through IRFC, a little above the FY13 target.

The increase in plan outlay is mainly to clear a huge backlog of pending projects, to increase spending on safety enhancing measures and to budget for higher outgo in terms of fuels expenses.

Sensex flat; financial services stocks up on licence hopes

10 am The Indian equity markets started off an eventful week on a flat note as investors waited for cues from the Budget and the key third quarter GDP number.

The Sensex was at19309, down 0.04 percent and the Nifty at5847, down0.04 percent. The BSE mid-cap index outperformed the benchmark index to rise 0.4 percent due to the upmove in many non-banking finance company stocks that are considered potnetial candidates for banking licence.

Cautious investors are waiting with baited breath to see how Finance Minister P Chidambaram is going to balance revenue and expenditure.

AFP

AFP

The Budget Session of Parliament began on 21 February. The Railway Budget for this fiscal would be presented to the Lok Sabha tomorrow and the economic survey would be laid in Parliament on 27 February, followed by the Union Budget on February 28.

There has been wide belief that the government will present a non-populist budget this year, as there is a heightened fear of rating downgrade by rating agencies.

Moody's had last week warned that India's widening trade deficit is "credit negative" for the country and also raises its vulnerability to global shocks.

At present, Moody's has a 'Baa3' (lowest investment grade) rating for India with a stable outlook and any downward revision from here could pull the country's credit rating into junk grade.

Stocks in news

Mahindra & Mahindra Financial services was up more than 7 percent on hopes that the company is likely to get banking licence. Other financial services companies that surged on hopes of getting the licence include Bajaj Finance and IDFC.

Jet Airways was down 1.5 percent on fears that its deal with Etihad may not go through as the Abu Dhabi-based airline is unhappy with the terms of the deal. Jet's board meet was cancelled last week due to concerns raised by Etihad.

GMR Infrastructure was up more than 1 percent after the Economic Times reported that the company is planning to sell its entire stake in the Singapore Power plant.

Tata Teleservices (Maharashtra) and Bharti Airtel were down on news reports that the CBI has registered fresh case against the companies. The Bharti and Tata Tele international call arrangement allegedly violated DoT norms. They allegedly have illegal international call arrangement with Singapore telecom. The CBI has registered case under section 120b & 420 of Indian Penal Code.

by Firstbiz Staff

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