Indian stock market indices have recovered some losses but are still trading weak. IT and FMCG stocks are witnessing the maximum losses. However, stocks in Consumer Durables and Realty space have bucked the trend and are trading in the positive.
The BSE-Sensex is down by 80 points while NSE-Nifty is trading 12 points below yesterday's closing. BSE Midcap and BSE Small cap indices are up by 0.4% and 0.1% respectively. The rupee is trading at 44.50 to the US dollar.
Telecom stocks are trading firm led by Tata Teleservices and Tata Communication. As per a leading daily, the mobile phone companies have started slashing dealer margins on recharge coupons and are changing voice and text tariffs in some regions. Leading telecom operators like Bharti Airtel, Vodafone Essar and Idea Cellular have reduced dealer commissions by 30% in Mumbai circle over the last few weeks. The commissions on the first recharge are down to Rs 35 from the earlier Rs 50 on a sale of Rs 110. The other smaller operators are likely to follow suit. This is being seen as a step to deal with loss in revenues and resultant fall in profitability. These commissions on recharges account for nearly 3% of the industry’s revenues of about Rs 1,070 bn. The industry is likely to benefit to the tune of Rs 10-20 bn as a result of the said development.
Auto stocks are trading mixed with Maruti Suzuki and Tata Motors trading firm while M&M and Hero Honda are trading weak. As per a leading financial daily, 1QFY12 (first quarter of financial year 2011-2012) results for four wheeler companies are likely to be impacted as a result of lower than expected volume growth due to weakened demand and high raw material costs. However, top line growth is expected to be better on the back of upward price revision by companies during the quarter. Average sale of the industry is expected to grow by 16-18% YoY during the quarter while average net profit is expected to grow by 10-12% YoY. On the other hand result of bike manufacturers is expected to be robust as a buyers moved to fuel efficient motorcycles. While most two-wheeler companies increased prices of their vehicles by 1-2% on account of higher prices of steel, rubber and other metals, they did not pass on the full burden to their customers. This helped keep demand strong and the two-wheeler industry insulated from the tough macro economic conditions.