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Thursday, July 26, 2001

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Markets | Next


Dwindling volumes, diminishing values

Sowmya Krishnan

THE markets have been ruling in the negative terrain with the Sensex losing value consistently accompanied by dwindling volumes. The reasons could range from a change in the trading system, the uncertainty among small investors caused by the UTI crisis and the general slowdown in the economy. Retail investors are playing a cautious game. However, FIIs have been major players and inflows from FIIs have been quite comfortable.

In a declining market, few stocks have attracted attention and braved to move up on the back of company specific developments. For instance, Sintex Industries has gained a noticeable 21 per cent and is trading at around Rs 32.50, just a shade lower tha n the highest price of Rs 33 in the past six months.

Considering the diverse nature of its business, the company had recently announced its decision to hive off the two businesses -- plastics and textiles -- into two separate units and is also scouting for a strategic partner to manage its textile busines s. The specifics of the demerger have not yet been finalised.

Another stock, German Remedies, has also been on the uptrend on the back of an open offer made by Zydus Cadila to acquire a 20 per cent stake in the company. During the past fortnight, the stock has gained almost 12 per cent in value from around Rs 400. However, the stock is currently priced at Rs 475 much lower than the open offer price pegged at Rs 650 per share. Therefore, there is a room for a further uptrend in the stock.

Zydus Cadila had earlier acquired a 27.72 per cent stake in the company from Asta Medica AG and Heller and once the open offer is through, Zydus' stake in the company will be close to 50 per cent. An eventual merger between the two companies can also not be ruled out.

But considering the uncertainty about its relationship with other collaborators and the not so impressive performance of the company for the year 2000-2001, the uptrend may not sustain beyond the open offer.

German Remedies is a specialist in feminine health care and focuses on high margin therapeutic segments such as female health care, respiratory care, gastroentorology, cardiovascular, oncology and diagnostics.

Oil and Natural Gas Corporation has been another significant gainer during this period. The stock has appreciated by around 12 per cent and is currently valued at Rs 158.60.

After a smart rally in June on the expectation of a share buy back, the Nestle India stock appears to be retreating. The share price is marginally lower from Rs 550 two weeks ago to Rs 541.05 now.

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