Most Asian stock markets have opened the day on a weak note with stock markets in Hong Kong (down 0.5%) and Malaysia (down 0.4%) leading the losses. The Indian stock markets have opened the day in the green. Stocks in the banking, consumer durables and auto space are trading firm. However, technology stocks are trading in the red.
The BSE-Sensex is up by 36 points (0.2%), while the NSE-Nifty is up by around 12 points (0.2%). Mid cap and small cap stocks are also trading in the green, with the BSE Mid cap and BSE Small cap indices up by 0.4% and 0.5% respectively. The rupee is trading at Rs 52.09 to the US dollar.
Auto stocks have opened the day on a firm note with Maruti Suzuki, Hero MotoCorp and Tata Motors (Telco) leading the gains. In a bid to make inroads in the two-wheeler market dominated by players like Hero MotoCorp, Bajaj Auto and Honda Motorcycles & Scooter, leading utility vehicle maker Mahindra & Mahindra Ltd. (M&M) has started making very bold offers. M&M is offering an amount of Rs 500 simply for taking a scooter test drive. That too, without any obligation to buy the two-wheeler. The company's thought process behind this is that the prospective customer would probably hold on to the first impression and not look around for other scooter models.
On account of rising fuel prices and high interest rates, the demand for two-wheelers has been witnessing some slow down in recent times. In order to counter the tough market conditions and reduce the inventory pile-up, two-wheeler companies have resorted to offering cash benefits and lower interest rates.
Construction stocks have opened the day on a mixed note with DLF and Gammon India facing selling pressure. However, IVRCL, Nagarjuna Construction Company (NCC) and Hindustan Construction Company (HCC) are trading firm. BOT (Build-Operate-Transfer) assets particularly road and highway projects have hurt the infrastructure companies more than anything else in recent times. Most companies that had ambitious plans with regards to BOT assets have seen debt piling up in their books. As a result, they were badly hurt with the interest rate hikes announced by the Reserve Bank of India. One of the worst impacted by the debt is HCC which is looking at selling its noncore assets to pay back its huge mountain of debt. Other companies like IVRCL, NCC and Gammon Infrastructure have also faced problems due to their BOT assets. The BOT assets were once considered to be high return assets earning in excess of 100% returns in some cases.