The Indian markets were trading below the dotted line during the previous two hours of trade. Most of the sectoral indices are trading weak with the BSE-Auto, BSE-Realty and BSE-Bankex indices leading the pack. The BSE-IT and BSE-Oil & Gas indices are, however, trading firm.
The BSE-Sensex is trading lower by about 60 points (down 0.3%), while the NSE-Nifty is trading lower by about 20 points (down 0.4%). Small and midcap stocks have also followed suit as the BSE Midcap and the BSE Small cap indices are trading lower by about 1% and 0.9% respectively.
Auto stocks are currently trading weak led by Tata Motors, Escorts, TVS Motor, and Hero Honda. The stock of Hero Honda is trading weak seemingly on the back of news of Honda Motors recently announcing plans of launching motorcycles in the 100 cc space in the coming months. This will mark Honda Motors’ entry into the largest motorcycle segment, the 100 cc category, in which Hero Honda has the largest market share. There are also reports of Honda opening a new India plant this year, which will further boost capacity. It must be noted that Honda was not allowed to enter this segment on its own as it held 26% stake in Hero Honda earlier. Taking away market share from Hero Honda will not be an easy task considering that the company has strong brand awareness and sales reach. The company is believed to have 4,500 outlets in India, while Honda Motors has about 800 outlets. However, not long ago, the management of Bajaj Auto had stated that it was only worried about what changes Honda Motors can bring in the industry in terms of technology.
Stocks from the oil and gas sector are trading firm with Reliance, Petronet LNG and Cairn India trading higher, while ONGC is trading lower. According to a leading daily, ONGC expects to increase daily gas production by 2 m standard cubic meters and 9,400 barrels of associated oil per day initially from KG-Basin once the two offshore blocks - G1 and GS-15 start production from May this year. As per the plan, nearly 2 m cubic meters oil or gas will be produced from these blocks initially. Based on the sustainable tests the production will be scaled up over a period of time. ONGC expects oil and gas production from these fields for the next 15 years with a peak production of 20 m standard cubic meters per day. The increased production will have a significant positive impact on the topline in the future.