Asian stock markets have opened the day on a mixed note with China (up 0.3%) and Hong Kong (up 0.3%) trading in the green. However, markets in Indonesia (down 0.8%) and South Korea (down 0.6%) are facing selling pressure. The Indian share market indices have opened the day on a positive note. Stocks in the capital goods and realty space are leading the gains. However, oil & gas stocks are trading weak.
The Sensex today is up by around 17 points (0.1%), while the NSE-Nifty is up by around 7 points (0.1%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.2% and 0.3% respectively. The rupee is currently trading at Rs 62.78 to the US dollar.
Auto stocks have opened the day on a firm note with Tata Motors, Ashok Leyland and Hero MotoCorp leading the gains. As per a leading financial daily, India's leading auto firm Tata Motors will stop production at its Spanish subsidiary Tata Hispano Motors Carrocera. The company decided to stop production owing to adverse economic and business conditions. Despite significant investments, there has been no business revival and the plant continues to make losses. Over the last five years, the Spanish arm's operating losses accumulated to over 60 million Euros. Production has been on a constant decline due to falling sales in recent years. This has been most adverse decline in the bus market.
The Spanish arm has informed the workers committee about the decision to stop production at the factory. After completing delivery of current orders, the production will be stopped in October 2013. The move to stop production will have an impact on the entire workforce of 287 employees.
PSU bank stocks have also opened the day on a firm note with Central Bank, United Bank of India and Union Bank of India leading the gains. As per a leading financial daily, India's leading public sector lender State Bank of India (SBI) has discontinued giving loans to road projects that have not completed land acquisition for any part of the proposed stretch. As per SBI chairman, Pratip Chaudhari, earlier the bank used to finance the project even with 95% land acquisition. But now it will lend only if 100% of the land has been acquired. This step comes at a time when there has been a significant jump in bad loans. The Chief Vigilance Commission and Central Bureau of Investigation have also urged banks to tighten lending norms.
According to the Reserve Bank of India, SBI's exposure to road projects stood at Rs 1.4 trillion in July 2013, higher by 23% on a year-on-year basis. It must be noted that along with its associate banks, SBI accounts for about a fifth of the loans. As such, the state-run bank's latest move could adversely impact infrastructure projects that have severe funding constraints.