Although trading in the positive zone, the Indian markets saw some volatility during the previous hour of trade. At the time of writing, stocks from the capital goods, IT and healthcare spaces were leading the pack of gainers, while those from the FMCG and realty spaces were amongst the top losers. The market breadth seems to be pessimistic at the moment as there were 2.6 losers for every gainer on the overall BSE.
The BSE-Sensex is trading up by around 60 points (up 0.3%), while the NSE-Nifty is up by about 16 points (up 0.3%). Midcaps and smallcaps continue to see pressure with the BSE-Midcap and BSE-Smallcap indices trading lower by 0.9% and 1.1% respectively. The rupee is trading at 45.78 to the US dollar.
Hotels stocks are trading weak led by Hotel Leelaventure, Taj GVK and Indian Hotels. However, the stock of EIH is trading firm on the back of news of the company considering a rights issue. While the size and ratio will be decided after the board meeting on 23rd September, this has sparked speculations that the promoters as well as the Reliance group, which recently bought over 14.8% in the company, could buy unsubscribed portion of the issue to raise their holdings. This would give the Oberoi's and the new shareholder an opportunity to strengthen their holdings in the company and help minimize the possible risk of any hostile takeover bid by ITC. On the other hand, there are indications that ITC is not interested in subscribing to the rights issue. This is because getting control of EIH looks difficult as Reliance is now a stake holder in the company. The proceeds from this rights issue are expected to be utilized to reduce the company's debt and finance its expansion.
Auto stocks are currently trading firm weak led by TVS Motor, Ashok Leyland and Bajaj Auto. In an attempt to cut costs, Tata Motors UK-subsidiary Jaguar-Land Rover's (JLR) is considering launching new vehicles on fewer platforms. This would help it keep costs under control as well as simplify manufacturing lines. It would also allow the company to increase its flexibility as well as improve the efficiency levels as well as a reduction in product development time. A leading business daily has reported that Tata Motors is planning on having only four platforms (as against nine) over the next two to three years. This would be an effect of new technology. As per the company, Tata Motors is also initiating joint development programmes with its UK subsidiary for engines, vehicles and platforms. JLR was acquired by Tata Motors in 2008 for two key reasons – technology and brand. If one were to go by news and developments in recent times, it does seem that the companies have increased their efforts towards capitalising on the synergies that will arise out of Tata Motors and JLR working together.