Auto, power buoy the markets

Tue, 16 Feb 11:30 am

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Despite some volatility, BSE managed to break into the positive territory during the previous two hours of trade. Currently, stocks from the auto, power, metal, capital goods and healthcare sectors are leading the pack of gainers, while select stocks from the telecom, banking and realty sectors are trading weak.

The BSE-Sensex and the NSE-Nifty are trading higher, up by around 43 points and 8 points respectively. The BSE-Midcap and BSE-Smallcap are also trading higher, up by around 0.07% and 0.18% respectively. The rupee is trading at 46.16 to the dollar.

According to a leading business daily, Axis Bank, a leading private sector bank is opening a branch in Oman as a step towards deepening its penetration in West Asia. It may be noted that bank already has 5 international offices in Hong Kong, Singapore and Dubai, focusing on corporate lending, syndication, trade finance, investment banking, risk management and liability businesses. Currently, the bank derives 10% of its business from overseas operations and expects this to grow significantly going forward.

It may also be noted that the bank is aiming to increase its retail lending portfolio to 25% of its total lending in the short term. Presently, the total retail asset size for the bank is Rs 190 bn. Herein, the bank is planning to increase auto loans component of the retail portfolio from 17% to 25% of total retail lending. We believe that this is a positive move for the bank provided it maintains adequate asset quality and keeps itself away from the rate war characteristic of the retail lending segments. Banking stocks are trading on a mixed note.

As per a leading business daily, India's leading automobile manufacturer Tata Motors has appointed former General Motors (GM) executive, Mr Carl-Peter Forster as the group's CEO. Mr Forster is a German national and was heading GM's European operations previously. As a CEO at Tata Motors, he will be responsible for company's global operations including its British units- Jaguar and Land Rover. This is the third time that US$ 71 bn Tata group, equally admired in India and abroad, has appointed an expatriate at the helm of its business unit. We believe this is a real indication of company acquiring a truly global stature. Tata Motors is currently the top gainer on BSE. While other auto stocks like M&M, Maruti Suzuki are also finding favor, Hero Honda is trading in the red.

In other news about the company, it is in talks with SBI for selling 49% stake in Tata Motor Finance, latter's vehicle financing arm. If the deal comes to fruition, SBI will be able to expand into commercial vehicle financing particularly loans for trucks and buses where it has no presence currently. SBI is trading in the green currently.