India begins on a choppy note

Fri, 15 Jan 09:30 am

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The Indian markets have started on a choppy note. The benchmark indices opened above the breakeven mark but are struggling to stay in the positive territory since then. Asia is currently trading a mixed bag with South Korea (up 0.8%) leading the pack of gainers. However, Japan is down 0.2%. The US markets closed higher by 0.3% yesterday.

Currently, in India, heavyweights from the BSE-Sensex are trading a mixed bag with auto and banking stocks witnessing buyers' interest. However, select software heavyweights are in the red. The BSE-Sensex is trading higher by 10 points, while the NSE-Nifty is up by 6 points. Buying interest is also being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-smallcap indices are trading higher by 0.6% and 0.7% respectively. The rupee is trading at 45.65 to the US dollar.

Auto stocks have opened the day on a strong note. Gainers here include Bajaj Auto and M&M. As per a leading business daily, Maruti Suzuki is finding it difficult to control the recent price rise in commodities like steel, aluminium, copper and rubber. The company is trying to come out with more affordable versions of its current range of models such as Alto and WagonR. But the commodity price hikes mean that its efforts are negated. It may be noted that Maruti Suzuki is on a cost-cutting drive across its manufacturing and distribution operations. Component suppliers, who are independently battling the cost pressure, are also being asked to cut prices. Auto companies are witnessing robust topline growth on the back of strong volumes. In our view their next big challenge would be to protect their margins in the face of higher input costs.

Power stocks have opened the day on a strong note. Gainers here include NTPC and NHPC. As per a leading business daily, power generation behemoth NTPC plans to add 6,000 MW each year in 12th Plan. In the remaining two years of the 11th plan, i.e. 2010 and 2011, the company plans to add 4,000 MW each year. Put together, it will take its total generation capacity to 75,000 MW by 2017, up from 30,644 MW currently. Interestingly, 9,000 MW out of the 75,000 MW will be from hydro electric projects and 2,000 MW will be from nuclear projects. At present, 18 projects of 17,930 MW capacity are under construction at 16 locations. While there is certainly a ready market for such capacity, the main issues for NTPC will be timely execution and sufficient supply of fuel such as coal and natural gas. It may be noted that the company is launching a follow-on issue from February 3 to February 5.