After starting the day in the red, Indian indices have managed to enter the positive territory following strong buying interest in heavyweights. Currently, stocks from the auto and IT space are leading the pack of gainers. However, stocks from the power, healthcare and banking space are trading weak.
Currently, the BSE-Sensex is trading up by around 39 points, while the NSE-Nifty is up by about 12 points. There has also been some buying interest amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.2% and 0.7% respectively. The rupee is trading at 46.57 to the US dollar.
Auto stocks are trading strong with Hero Honda being the biggest gainer. M&M and Eicher Motor are also trading firm. However, Ashok Leyland and Tube Investments are trading weak. One of the reasons why Honda opted to end its 26-year-old alliance with the Hero Group seems to be more stringent emission norms, set to kick in by 2015 for two-wheeler makers. The new Bharat Stage IV norms, to be imposed across India for two-wheelers by then, would be very different from the Bharat-III ones enforced currently. The pollution rules set to be enforced from 2015 require heavy investment in R&D, new tech. Manufacturers are supposed to make technical changes to their vehicles accordingly.
The new norms will pose a challenge to the Hero Group, which is now looking to develop its own research and development wing. It was unable to upgrade its range to BS-III from BS-II in time for meeting this year’s March 31 deadline, forcing the government to extend the time-limit for implementing cleaner emission norms for two-wheelers across the country.
Steel stocks are trading mixed with Ispat Inds, Bhushan Steel and JSW Steel leading the gains. However, Adhunik Metaliks and Tayo Rolls are trading weak. According to a leading daily, Tata Steel, the world's No. 7 steel maker, is in talks to sell its South African assets to raise more than US$ 150 m. It may be noted that the company’s inorganic growth through the acquisition of Corus, has left it in a tight spot. Tata Steel will have to repay debt as also ensure that synergies kick in. It will also have to successfully apply Corus' downstream technology in value-added products to its India operations.