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Midcap & smallcap stocks in favour
Fri, 11 Apr 01:30 pm

Indian share markets continued to trade weak in the post-noon trading session. Majority of the sectoral indices are trading in the red with capital goods, oil & gas and auto stocks being the major losers. Pharma, consumer durable and realty are among the few stocks trading positive.

BSE-Sensex is down 165 points and NSE-Nifty is trading 47 points down. BSE Mid Cap is trading 0.3% up and BSE Small Cap index is trading up by 0.6%. The rupee is trading at 60.2 to the US dollar.

Majority of the automobile stocks are trading in the red with Eicher Motor and TVS Motors being the biggest losers. Only Ashok Leyland and Escorts are trading in the green. As per Society of Indian Automobile Manufacturers Association (SIAM), domestic sale of automobiles recorded a marginal rise of 3.5% in FY14 thanks to a 7.3% growth in the sale of two-wheelers. Within the two-wheeler segment, scooters and motor cycles clocked growth of 23.2% and 3.9%, respectively. However, sale of passenger cars fell by 6.1% during the year. Slow economic growth, high inflation and vehicle finance rates led to a slump of 20.2% in the sale of commercial vehicles in FY14. SIAM expects domestic cars and utility vehicles segment to grow at a modest pace next year.

Barring few stocks like South Indian Bank, almost all banking stocks are trading weak today. Losers are being led by ING Vysya and ICICI Bank. As per a leading business daily, United Bank of India is expected to put up bad loans worth Rs 4 bn on a block sale during the June 2014 quarter. The bank is in a move to clean up its balance sheet after it reported gross NPA of 10.82% to gross advances during December 2013 quarter. The crisis hit United Bank, earlier had failed to sell bad assets worth Rs 4-4.5 bn in the March 2014 quarter on account of very low quotes demanded by asset reconstruction companies (ARCs). At that price, the bank would have incurred huge losses. So the bank is discussion with ARCs to fetch better price from auctions this time. Recently ARCs, that acquire bad assets at a discount and recover money from defaulters, have seen a large supply of stressed assets from banks. The country's largest bank SBI is also in a process to sell NPAs worth Rs 35 to Rs 40 bn to ARCs. The stock of United Bank is trading higher by 0.8% today.

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