Auto stocks lead the pack of gainers

Mon, 4 Jan 01:30 pm

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Although trading in a range bound manner, the Indian markets managed to stay above the dotted line during the previous two hours of trade. Currently, the overall advance to decline ratio is poised at 2.8 to 1 on the BSE. Currently buying activity is being witnessed in stocks across sectors led by auto, metal and PSU stocks. However, profit booking is being witnessed in the oil and gas space as the BSE-Oil & Gas Index is trading lower by about 0.7%.

The BSE Sensex and NSE Nifty are trading in the positive, up by 40 points and 15 points respectively. Midcap and small cap stocks seem to be in more favour as the BSE-Midcap and the BSE-Smallcap indices are trading higher by 1.1 and 1.5% respectively. The rupee is trading at 46.52 to the dollar.

Auto stocks are currently trading firm led by TVS Motor, Ashok Leyland and M&M. The stock of Ashok Leyland is currently amongst the top gainers in stocks forming part of the BSE-A group. Gains in the stock are supposedly on the back of the company launching a new platform of trucks. Termed as 'U Truck', this platform is designed to meet the Bharat Stage (BS) III, BS IV and even BS V emission norms. In addition, it would also provide higher power and fuel efficiency. The management of Ashok Leyland has stated that all of the company's products would gradually shift to this platform. In addition, it is also believed that the company is looking to launch about 25 products on the new platform over the next eighteen months. The company is slated to manufacture these trucks from its new factory in Uttarakhand. Production of the same is scheduled to begin by March this year.

It must be noted that the new fuel emission norms are scheduled to come into effect from April 1 this year. As such, all commercial vehicle (CV) manufacturers are required to upgrade platforms. Tata Motors, for example, launched its 'World Truck' platform a while back. This is therefore a positive development for Ashok Leyland considering that this technology would allow it to compete with Tata Motors in the CV space. In addition, with Tata Motors announcing a strong volume growth of about 140% and 14% on a year on year and month on month basis respectively in its CV segments, investors may be expecting the story to be similar in the case of Ashok Leyland.

Textile stocks are currently trading firm led by Raymond, Alok Industries and Welspun India. In a move to protect itself from the tough export markets, textile major Arvind Limited is looking at expanding its retail reach in India. The company's management believes rural India has become a very lucrative market, considering that disposable incomes and awareness about branded items has risen in recent times. As such, the company plans to set up a distribution network across the country with at least 1,000 to 1,500 points of sale in each state. A leading business daily has reported that these points of sale would also included non-textile shops such as grocery stores and petrol pumps, amongst others. The main product that Arvind is looking at marketing in such a manner is its shirt. The pricing of this product would be in the more 'affordable' category, the management added.

Arvind is amongst the many textile companies that are looking at the domestic markets to fuel their growth going forward. Factors such as increasing competition, currency fluctuations and volatile demand surrounding the export markets are the reason for the same.