Energy, realty pull markets lower

Mon, 3 Sep 01:30 pm

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Persistent selling activity led the Indian equity markets to fall into the negative territory during the post noon trading session. Barring stocks from the consumer durables and power sectors, other sectoral indices are witnessing pressure with oil & gas, realty and metal sectors leading the pack of underperformers.

The Sensex today is trading lower by about 65 points (down 0.4%), while the NSE-Nifty is down by about 10 points (0.1%). Midcap and smallcap stocks are also trading weak with the BSE Mid Cap and BSE Small Cap indices trading marginally lower. The rupee is trading at 55.47 to the US dollar.

As reported by the Hindu Business Line, India's manufacturing sector saw its weakest growth rate in about nine months during the month of August 2012. The key reasons for the same were lower exports and power failures, leading to disruption to manufacturing activity. The index used to measure production - HSBC India Manufacturing Purchasing Managers' Index (PMI) - eased to 52.8 in August, from 52.9 in July. It is also reported that the survey showed output prices increasing in the month of August, possibly leading to higher inflation rates as compared to July's rate of 6.9%. With the same happening, the input price pressures remained elevated, thereby giving little room to the Reserve Bank of India (RBI), which meets in two weeks, to cut interest rates and support growth.

Auto stocks are currently trading mixed with TVS Motor and Tata Motors trading weak while Bajaj Auto and Maruti Suzuki are trading firm. Despite Maruti Suzuki's production being hit by the month long factory close at Manesar, sales of passenger cars showed encouraging sign during the month of August 2012. Maruti's sales dropped by 35% YoY while Tata Motors' sales volumes increased by a third during the month. Volumes of the latter were largest on account of an over five-fold increase in sales of Nanos. Mahindra & Mahindra (M&M) reported a 30% YoY jump in sales led by higher sales of diesel vehicles (largely utility vehicles). As per the management of M&M, the company is quite happy with its performance given the overall dull environment and high interest rates. It is reported that Hyundai Motor India Ltd (HMIL) reported an 8% decline in total sales during the month. The decline was largely due to lower exports. Domestic sales were by about 6% YoY.