The Sensex today is down by around 74 points (0.4%), while the NSE-Nifty is down by around 23 point (0.4%). Mid and small cap stocks are also trading in the red with the BSE Mid Cap and BSE Small Cap indices down by around 0.3% each. The rupee is trading at Rs 58.27 to the US dollar.
Auto stocks have opened the day on a weak note with Hero MotorCorp, Tube Investments and Bajaj Auto leading the losses. As per a leading financial daily, car sales in May stood at 143,216 units as against 163,222 units in May 2012, a decline of 12% year-on-year (YoY). This is the seventh consecutive month when the Indian car market has witnessed a drop in sales. Amidst these worrying signs for the auto sector, carmakers have been resorting to production cuts. For instance, India's leading passenger vehicle manufacturer Maruti Suzuki had announced closure of all its five plants for eight days in June with the aim to cut down inventory at factories and dealerships as well as for periodic maintenance. It is feared that such production cuts will eventually lead to several job losses.
Information technology stocks have opened the day on a mixed note with Mahindra Satyam, Tech Mahindra and Infosys leading the gains. However, Tata Consultancy Services (TCS) and Wipro are facing selling pressure. As per a leading financial daily, the Andhra Pradesh High Court has given approval to the merger of Mahindra Satyam with Tech Mahindra. Effectively, the court dismissed petitions of some shareholders who had objections to the proposal in its current form. However, the Court said that the investigations into the alleged fraud committed by Satyam Computer's former chairman Mr Ramalinga Raju and others would continue. It must be noted that after the financial fraud committed by Mr Raju was unearthed, Satyam was taken over by the Mahindras. The Mahindras now plan to merge Mahindra Satyam with Tech Mahindra. After the completion of the merger, the new entity will become India's fifth largest software services firm. As per Mahindra Satyam CEO Mr C P Gurnani, the receipt of technical clearances and the formation of the new entity would take another 2-4 weeks.