Selling pressure continued to push the Indian markets deeper into the red during the post noon trading session. Stocks across sectors are trading weak with those from the consumer durables, capital goods and banking spaces leading the pack of losers, while FMCG and realty stocks are amongst the best performers.
The BSE-Sensex is currently trading lower by 270 points (down 1.5%), while the NSE-Nifty is trading lower by 100 points (down 1.9%). Stocks from the mid and smallcap spaces are also under pressure as the BSE Midcap and BSE Small cap indices are trading down by 1.8% and 1.6% respectively. The rupee is trading at 45.46 to the US dollar.
Auto stocks are currently trading weak led by Bharat Forge, TVS Motor, Ashok Leyland and Tata Motors. The stock of Ashok Leyland has not been in favour for a while now. From a high of Rs 82, the stock is currently trading lower by about 44% at Rs 46. Quite a few factors have played a role for this sharp decline. The slowdown in sales volumes, poor operating performance during the quarter ended December 2010, the company's sales volumes for the month of January 2011 failing to meet market expectations. Apart from company specific issues, other factors such as rising competition, rising inflation and in turn commodity prices, rising interest rates, rising fuel prices, have been taking a toll on commercial vehicle manufacturers as well. Apart from these, another factor that is looming the commercial vehicle industry is the shortage of truck drivers.
A leading business daily has covered a story stating that with the many issues that truck drivers have been facing for a while now (such as punishing work schedules and harassment at octroi posts) have led to many drivers to move towards easier and attractive employment options (government programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme, etc) to earn a living. As per a certain fleet operator, about 5 to 15% of the trucks of most transport firms are idle on the back of this issue. It may be noted that the issue of shortage of drivers has been going on in the country for a while now. But with this development coming at a time when the industry is facing issues which are out of its control would only add to the woes.
Auto Ancillary stocks are trading deep in the red with Bharat Forge, SKF India, Bosch leading the pack of losers. SKF India, one of the largest manufacturers of bearings announced its results. For the quarter ended December, 2010 the company reported a 16% growth in topline and 41% surge in the bottomline. It seems the bearings company has managed to keep its expenditure under check despite the inflationary environment. For the full year (CY10) the company registered a 32% rise in the sales, whereas its profits zoomed by a whopping 88%. Profits for the full year stood at Rs 1,770 m.