Indian equity markets gave up early gains and were trading flat over the last two hours of trade. FMCG and Auto stocks witnessed maximum buying interest, while capital goods and realty stocks witnessed maximum selling pressure.
Auto stocks are trading in the green. Mahindra and Mahindra and Bajaj Auto are the biggest gainers while Exide Industries and TVS Motors are the biggest losers. According to a leading financial daily, Maruti Suzuki is losing over Rs 900 m a day, due to the lockout in its Manesar plant. The lockout is affecting over 650 units and has threatened closure of many ancillaries in the 60 km Gurgaon-Manesar-Dharuhera belt employing nearly 1 m workers. About 270 auto component vendors, too, are facing losses. Apart from component suppliers, transporters, manpower suppliers and logistics companies are also getting affected. Particularly, the SME sector units, who are facing the severe threat of closing down and going out of business.
Finance stocks are trading strong led by Bajaj Finserv and Power Finance Corporation (PFC). As per a leading daily, PFC will start talking to Tata Capital about setting up a US$ 1 bn private equity (PE) fund. The fund so formed will be a joint venture between Tata Capital and PFC in the ratio 51:49. Initially, in the first stage, US$ 300 m will be used to set up the fund and later on, the expansion will result in up to US$ 1 bn investment in all. The funds will be used to buy stake in power projects and may be later even in coal mines. We may note here that PFC has shortlisted Tata Capital, Religare, Reliance Capital and Edelweiss in order of priority for starting negotiations. In the meanwhile, PFC reported a jump of 42% in net profit in quarter ended June 2012.