At a time when the world is gung-ho about the India story, the Indian stock markets seem to be developing cold feet.
MUMBAI: At a time when the world is gung-ho about the India story, the Indian stock markets seem to be developing cold feet. The Birlas are set to ascend the global aluminium league, the Tatas are No 5 in steel after the Corus takeover, and Suzlon wants to harness favourable winds to take over Germany’s wind energy major REpower, but punters have taken a dim view of these bold initiatives.
On Monday, when the Bombay Stock Exchange Sensex tanked 348 points, worried investors were dunking Hindalco Industries by 13.74%, while Suzlon Energy declined 13.26%. On Sunday, the former had announced its $6 billion acquisition of Atlanta-based Novelis, the world’s leading producer of aluminium-rolled products. Suzlon has made a $1.33 billion offer for its faltering German competitor, REpower Systems AG.
“The market is not prepared to accept the fact that Indian corporations can absorb the huge debts they are creating to acquire companies larger than their own size,” says Sharekhan, in a post-market note.
The Birlas are financing $2.4 billion in a cash payout of $3.55 billion for Novelis through debt. Two weeks ago, when Tata Steel announced its successful bid for Corus, again financed substantially by debt, the share dropped 10.6%.
The market is also jumpy about deals that fail. On Sunday, when Vodafone bagged Hutch, the market dumped losing horse Reliance Communications, beating its share down by 4.32%.
Having won Hutch, Vodafone offloaded around 5.6% of its stake in Bharti Airtel to comply with the foreign holding cap in the telecom sector. This saw Bharti Airtel also coming under selling pressure, ending down 3.19%, even though Vodafone has offered a sweet deal to Bharti on sharing telecom infrastructure.
India Inc clearly has to start worrying about its image back home with investors.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}