Indian indices pared some of their gains on the back of profit booking in heavy weights over the previous two hours of trade. Stocks from the oil & gas and IT space are seeing maximum buying interest, while stocks from the banking and realty space are seeing the minimum buying interest.
The BSE-Sensex is trading up by 163 points while the NSE-Nifty is trading 65 points above the dotted line. BSE-Midcap index is up by 0.2% while BSE-Smallcap index is trading flat. The rupee is trading at 46.37 to the US dollar.
Hotel stocks are trading weak lead by EIH Limited. As per a leading financial daily, in order to compete with the 40 odd international chains that are entering India, The Indian Hotels Company Limited (IHCL) has announced that Vivanta would be its 5 star offering. Under this, 16 existing properties would be converted to the Vivanta brand, bringing the total of such properties to 19. This brand will compete directly with ITC’s Welcome group and Oberoi’s Trident. The 19 properties of Vivanta will have an inventory of 2,500 rooms and 13 properties will be launched in the next 18 months. IHCL plans to expand this brand aggressively and over the next 2 years will have 30 Vivanta hotels with an inventory of 5,000 rooms.
It may be noted that IHCL has 47 properties under construction with a total asset value of around US$ 3 bn. However, the company is betting on an asset light strategy and is entering into management contracts with hospitality players.
Auto ancillaries companies are trading mixed with Sundaram Fasteners and SKF India trading firm while Bharat Forge and Sona Koyo Steer are trading weak. As per a leading financial daily, domestic tyre manufacturers are increasing prices by 2-4% this month as a result of higher rubber costs and rising demand. While MRF has already implemented a price increase of 2.5–4% from 31st August, 2010, Apollo Tyres has announced an increase but has still not implemented it. Ceat and JK Tyres are expected to announce the increase soon. It may be noted that tyre manufacturers have raised prices by 10-14% in four stages since the beginning of 2010. Moreover, rubber prices have shot up by 32% since January this year. The price increase is seen as an attempt by tyre companies to protect their margins.