Persistent selling activity led the Indian markets to drop deep into the red during the previous two hours of trade. Stocks from the realty space are leading the pack of losers, followed by those from the consumer durables, banking and metal space. The decline to advance ratio is poised at 5.8 to 1 on the overall BSE.
The BSE-Sensex is down by about 500 points (down 2.7%) while the NSE-Nifty is trading lower by 160 points (down 2.7%). The BSE-Midcap is down by 3% while BSE-Smallcap index trading lower by 3.5%. The rupee is trading at 45.57 to the US dollar.
Stocks of two wheeler companies are trading weak led by TVS Motor, Hero Honda and Bajaj Auto. Representatives of Honda Motor Company of Japan and the Hero group are set to meet shortly to give shape to the break-up of their more than 25 year old partnership at Hero Honda, the country's largest two wheeler company. For the past few months, the two partners have been discussing a change in the ownership structure of the company that would see the Hero group buy out Honda and acquire majority control over the bike maker. But there could yet be a twist in the tale, which could also see the option of Honda making a counter offer to the Hero group, as the Japanese company is unhappy about the extent of discount demanded by the Munjals, the Indian promoters.
Honda Motor already operates in the Indian market with a 100% owned subsidiary, Honda Motorcycles and Scooters, which directly competes with Hero Honda in the key two-wheeler segments. Honda is also planning to enter the 100 cc motorcycle market in which Hero Honda enjoys a majority market share. On the other hand, the Hero group is planning to set up its own R&D centre in preparation for life should it end up running the company on its own.
Banking stocks are currently trading weak led by SBI, ICICI Bank and Axis Bank. A leading business daily has reported that India's third largest bank, Axis Bank is looking at opening nearly 100 new branches across the country. As per the bank's senior management, this move is part of the bank's rural banking strategy and is besides the normal network expansion plans of the bank. The long term goal of this strategy is to extend its footprint in tier three, four and five centres of India having a population of around 10,000 to 50,000. It is believed that the bank is aiming to tap semi-urban as well as rural markets by bringing technology driven banking services to the hinterland of the country. As of now, the bank has a network of about 1,200 branches and 4,900 ATMs in 680 cities and towns across the country. It also has presence in Singapore, Hong Kong, Shanghai and Dubai and is believed to be looking at expanding operations globally as well.