Asian markets have opened today on a mixed note. While stocks in Hong Kong (up 0.4%) and Singapore (up 0.3%) are seeing buying interest, those in China (down 0.5%) and Japan (down 0.2%) are facing some selling pressure. The US markets closed 0.3% down yesterday. As for the Indian markets, these have opened in the positive today. Metal and power stocks are witnessing buying interest currently.
The BSE-Sensex is trading higher by around 200 points (1%), while the NSE-Nifty is up about 60 points (1%). Mid and small cap stocks are also trading with gains, with the BSE Midcap and BSE Small cap indices up by 1% apiece. The rupee is trading at 45.35 to the US dollar.
Banking stocks have been under pressure for quite some time now. Even today, stocks like Yes Bank, ING Vysya Bank, and IDBI Bank are trading weak. The BSE-Bankex is down around 6.7% over the past one month, a period when the BSE-Sensex has fallen by just around 1.5%. The fear that is stalking these stocks is that of the interest rate hike by the RBI in the near term. Plagued by rising inflation, the RBI is seemingly looking to raise rates in the forthcoming monetary policy review meeting on January 25. Anyways, the higher interest rate fear isn't just an Indian phenomenon. A lot of other central banks in emerging markets are looking to raise rates to fight off inflation. Most are willing to go to all lengths to fight rising prices of commodities like oil, food grains and metals, properties, and financial assets. How successful will these banks be in light of a heavy dose of cheap money that's flowing from the west (and thus adding to inflation) will be interesting to watch.
The competition is set to rise for Bajaj Auto in the three-wheeler market where it has a stronghold as of now (with a market share of 40%). This is given that Hero Honda, Bajaj's closest competitor in the motorcycles segment, is looking to enter the three-wheeler market. This move from Hero Honda comes as it scurries to grow its business amidst concerns of the negative impact of its separation from Honda Motors of Japan. The Hero group recently announced that it will be buying Honda's 26% stake in Hero Honda. While the technology transfer from Honda will continue till the agreement expires in 2014. The Hero group is not leaving any stones unturned as it looks to go out all alone in the highly competitive Indian automobile market. As per a leading business daily, the company is also looking at launching a passenger three-wheeler followed by a commercial goods carrier. Anyways, auto stocks are trading strong today, led by gains in Ashok Leyland and Tata Motors.