Indian stock market indices extended their early morning losses on the back of selling in heavy weights over last two hours of trade. Stocks from the IT and oil & gas space are trading weak and those from the capital goods and auto space are trading firm.
The BSE-Sensex is down by 180 points while NSE-Nifty is trading 53 points below Friday's closing. However, BSE-Midcap and BSE-Smallcap indices are up by 0.2% and 0.4% respectively. The rupee is trading at 44.46 to the US dollar.
Cement stocks are trading in the red led by Shree Cement and J K Lakshmi Cement. As per a leading financial daily, the cement industry is likely to see a double-digit growth from the next fiscal. The 197 m tonnes (MT) industry is already expecting an addition of 57 MT capacity by 2014. It may be noted that cement market in India is one of the fastest growing in the world and second largest after China amongst emerging economies. Currently, the size of the domestic cement market stands at Rs 778 bn.
The 57 MT additional capacity as per Ernst & Young report is unlikely to be absorbed domestically and utilization levels will remain at around 80%. From FY13, the demand will be more than supply and this trend is expected to continue in the medium to long-term. This can be attributed to two factors. One, low per capita intake of cement as compared to the global average and second the huge US$ 1 trillion infrastructure push by the government that will take place over the next five years.
Energy stocks are trading mixed with Petronet LNG and Indraprastha Gas trading firm while ONGC and GAIL are trading weak. As per a leading financial daily, Reliance Industries Limited (RIL) and DE Shaw may not launch retail financial services. This is because DE Shaw is essentially a fund managing house and not a bank or an asset management company. The JV in fact is expected to be related more to business to business transactions. It is believed that the JV partners are exploring the business of non-deposits taking NBFC. The focus of this venture will be on institutional finance and both the partners will make an equal investment. RIL and DE Shaw are both in the process of putting up a business plan for this venture and are expected to finalize it in the next 4 weeks. In the initial few years, the JV would focus on putting together a trading platform for the transaction of derivative contract in the financial and energy sector. The JV may also establish a PE fund for investments.
