Indian stock markets open weak on Asian cues

Wed, 8 Jun 09:30 am

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Asian stock markets have opened the day on a weak note. Stock markets in South Korea (down 1.2%), Hong Kong (down 0.9%) and Indonesia (down 0.4%) are leading the losses. The Indian stock markets have also opened the day in the red. Stocks in the oil and gas, technology and auto space are leading the pack of losers. However, FMCG stocks are trading firm.

The BSE-Sensex is trading lower by around 59 points (0.3%), while the NSE-Nifty is down by around 21 points (0.4%). However, midcap and smallcap stocks are trading in the positive with both the BSE Midcap and BSE Small cap indices up by 0.1% each. The rupee is trading at 44.74 to the US dollar.

Auto stocks have opened the day on a weak note with Mahindra & Mahindra, Bajaj Auto and Maruti Suzuki leading the losses. India's largest passenger car manufacturer, Maruti Suzuki, has been losing about Rs 400 m per day due to a workers' strike at its Manesar plant in Haryana. The company has already lost over 3,600 units in production due to the strike. Though the dealers of Maruti Suzuki have enough stock of petrol segment cars, the delivery of certain popular diesel models is bound to be delayed. Diesel cars comprise 20-25% of the company's total sales.

The workers went on a strike after Maruti's refusal to recognize the new union, Maruti Suzuki Employees Union, which was formed by a section of workers at the Manesar unit. According to the company, the new union has not shown proof that it can get support from the rest of the workers. The company assembles about 1,200 units every day in two shifts at the Manesar plant. The models assembled here include Swift and A-Star hatchbacks and the DZire and SX4 sedans.

Oil & gas stocks have opened the day on a weak note with Reliance Industries (RIL) and ONGC facing selling pressure. However, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are trading in the green. Oil refiner, Mangalore Refinery and Petrochemical Ltd's (MRPL) Rs 121 bn expansion project may miss the January 2012 deadline. The project aims at expanding the refining capacity by 25% to 15 m tonnes and employs around 17,000 people for construction. But the people displaced for the Mangalore SEZ (Special Economic Zone) are protesting for higher compensation and have blocked the roads. Even though MRPL is not part of the SEZ, this event has blocked the workers from entering MRPL's construction site. The company is also not able to move the cargo to the site from the port since last 14 days.