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Markets relinquish early gains
Thu, 23 Dec 11:30 am

After starting today's session on a cautious note, Indian indices have moved into the red. The other key Asian markets are trading mixed within a narrow range. Currently, heavyweights in the Sensex are trading flat with stocks from the realty and healthcare space leading the gains. However, stocks from the auto and consumer goods space are trading in the red.

Currently, the BSE-Sensex is trading down by around 21 points, while the NSE-Nifty is down by about 1 point. However, there has been some buying interest amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.16% and 0.17% respectively.

Auto ancillary stocks are trading mixed with Asahi India leading the gains. However, Bharat Forge and Amara Raja are trading weak. Apollo Tyres has forayed into Bangladesh through a tie up with Rahimafrooz distribution, a manufacturer and distributor of automotive and industrial batteries. The Rahimafrooz group has more than 10 exclusive outlets across Bangladesh with 500 dealers and distributors. It may be noted that Bangladesh is predominantly a cross-ply tyre market with a market size of approximately 45,000 and 30,000 HCV and LCV tyres per month. And since Apollo Tyres has a strong presence in the cross-ply market this collaboration will prove to be a strategic fit for the company. Apart from this the company also plans to introduce radial tyres in Bangladesh. However, since the usage of radial tyres is low in Bangladesh the company will have to be cautious here.

Auto stocks are trading weak with Ashok Leyland and Tata Motors leading the pack of losers. However, Eicher Motors is trading flat. As demand for automobiles is expected to increase in the coming months Maruti is looking at ways to ease capacity constraints and increase the output by 15-20% in 2011-12. Right now the company is operating at 100% capacity. In order to ease capacity constraints the company has already launched a second plant at Manesar but this is expected to become operational by the end of next year. Until then the company is looking at other alternatives on a temporary basis to expand production so as to meet incremental demand. For instance, the company has set up flexi-lines at Gurgaon facility. As opposed to assembly line which is designed to develop a specific set of products, flexi line can roll out different models as per demand. This should help ease capacity constraints to a certain extent. Further, the company has also initiated a multi-skill work force program so that the workers can assemble 3-4 different models rather than specialize in only one. This should give the company flexibility in production and help retain market share until the planned capacity comes on stream.

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Feb 21, 2018 01:27 PM