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Defensives in vogue today
Mon, 16 Jun 01:30 pm

Indian share markets continued to trade below the dotted line in the post-noon trading session. Majority of the sectoral indices are trading in the red with capital goods and power stocks being the biggest losers. IT and pharma are among the few stocks trading in the green.

BSE-Sensex is down by 96 points and NSE-Nifty is trading 31 points down. BSE Mid Cap is trading 0.4% down and BSE Small Cap index is trading down by 0.7%. The rupee is trading at 60.18 to the US dollar.

All the public sector banking stocks are trading in the red with Oriental Bank and Canara Bank being the major losers. As per a leading financial daily, seven state-run banks plan to raise funds to the tune of Rs 175 bn through share sale to capitalize on the smart turnaround in market sentiments for banking stocks. Perceptions such as no further rise in bad loans, stalled projects being cleared and new projects being unveiled are fueling interest for banking stocks. Banks such as Bank of India and IDBI Bank have committed to raise funds of Rs 40 bn at the current market prices. Reportedly bad loans in the banking sector surged by 50% to 1.38 trillion in 2013 whereas restructured loans jumped 7.5 folds to Rs 2.42 trillion for the year. However with economy showing signs of recovery coupled with changes in loan recovery rules, the sentiment surrounding banking stocks has improved. This in turn has provided banks greater flexibility to raise equity.

Automobiles stocks are trading mixed today. While Force Motors is trading firm, M&M is trading on a weak note. As per a leading business daily, India's largest two-wheelers major Hero MotoCorp is planning to launch bikes in the US market in 2015. The company is planning to create a niche segment in the US market from its existing product and will avoid bigger motorcycles despite the high-powered bikes having larger share in the US. The company will target smaller cities and inter-city commuting and it is expected to market its product through Erik Buell Racing (EBR). Hero MotoCorp holds 49.2% stake in EBR that is specialized in high performance sports bike. After the split with Honda Motors in 2011, the company has augmented its global presence across 18 countries. The company targets to achieve 10% annual sales (about 1 m units) from export markets by 2017. The stock is trading higher by 0.9% today.

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