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Auto stocks lead the rally
Tue, 10 Jul 11:30 am

Indian equity markets have been trading in the green during the last two hours of trade on back of buying across sectors. Power and FMCG stocks were the only losers amongst all sectoral indices.

The BSE-Sensex is up by 90 points and NSE-Nifty is up by 25 points. BSE Mid Cap and BSE Small Cap indices are trading higher by 0.6% and 0.7% respectively. The rupee is trading at 55.81 to the US dollar.

Automobile stocks are trading strong led by Tata Motors and Escorts. According to a leading financial daily, Tata Motors is looking to buy auto parts from China. The automobile company will buy sub-assemblies including automatic transmissions from the neighbouring country at cheaper prices. Tata Motors is facing increasing competition domestically from competitors such as Toyota Motors and Force Motors. For this, Tata wants to offer a wider choice of vehicles to entice customers, including vehicles with automatic transmissions. The Tata company fears that no domestic supplier would be willing to build such vehicles unless the volumes were high enough. Thus, it is looking at China to procure auto parts for these.

Steel stocks are trading in the green. JSW Steel and JSW Ispat are the biggest gainers, while Bhushan Steel and Maharashtra Seamless are the biggest losers. According to a leading financial daily, Steel Authority of India Limited (SAIL) is planning to expand its production capacity to 45 million tonne per annum (mtpa) by 2020. The company is currently in the middle of expanding its crude steel production capacity to 21.40 mtpa from 12.84 mtpa now with an investment of Rs 720 bn. On top of this, it plans to invest Rs 1,310 bn to raise capacity from 21.4 mtpa to 45 mtpa. SAIL will start work on increasing capacity to 45 mtpa as soon as the current phase of expansions is over next year. They will increase capacity through both greenfield and brownfield expansions. The greenfield plant may come up at Sindri in Jharkhand at the site of erstwhile Fretiliser Corporation of India.

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