Indian stock market indices traded weak over the last two hours of trade on the back of selling pressure across index heavyweights. All sectoral indices are in the red led by metals and auto stocks.
The BSE-Sensex is down by 107 points while NSE-Nifty is trading 31 points below previous closing. BSE Midcap and BSE Small cap indices are down by 0.7% and 0.3% respectively. The rupee is trading at 44.77 to the US dollar.
Auto stocks are trading in the red led by Ashok Leyland and Escorts. As per a leading financial daily, the ongoing strike at Maruti's Manesar plant has entered third day today. It may be noted that on Saturday, about 200 workers employed at the plant stopped production from the second shift of the day. This resulted in a production loss of 650 units on that day. On an average Maruti produces 1,300 units per day.
The workers working at Manesar plant have formed a new employee union and want recognition from the government for the same. Another reason for the strike is their demand about retaining contract workers for the two upcoming units inside the complex. They also want that the new office bearers of the recently formed union be recognized by the management and face no disciplinary action. Although production will be hampered until such time that the strike gets called off, we believe that this is a short term concern and will not harm the company's prospects from a longer term perspective.
Finance stocks are trading weak led by Motilal Oswal and Geojit BNP Paribas. As per a leading daily, Rural Electrification Corporation is planning to raise up to US$ 1.75 bn through a combination of foreign currency convertible bonds and external commercial borrowings. The state run power sector financier aims to raise this money by November this year. It plans to raise US$ 1 bn through FCCBs and US$ 750 m through external commercial borrowings (ECB). For ECBs, the company has approached RBI to get the necessary approval. For FCCBs, it is trying to get in touch with the power ministry. Since it is the first time that a public sector company is considering the FCCB way of funding, REC will have to submit a detailed plan explaining the benefit of FCCBs.