Metal & autos boost the markets

Wed, 19 Jan 09:30 am

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Asian markets have opened the day on a positive note. Benchmark indices in China (up 1.1%), Hong Kong (up 0.8%) and Korea (up 0.5%) are the leading gainers. Indian markets have opened the day on a good note. Metal and auto stocks are leading the pack of gainers.

The BSE-Sensex is trading higher by around 28 points (0.2%), while the Nse-Nifty is up marginally by about 7 points (0.1%). Mid and small cap stocks are trading in the positive as well with the BSE Midcap and BSE Small cap indices up by about 0.5% and 0.3% respectively. The rupee is trading at 45.35 to the US dollar.

It is just a day to 20th January, the day that mobile number portability (MNP) would finally be launched throughout the country. Idea Cellular and Vodafone are leading the marketing efforts. They are doing everything to convince customers to switch to their networks. Idea has even set up a toll free customer helpline to help customers in their decision to switch to Idea. It also plans to launch a fresh advertising campaign next week. However, incumbents like Bharti Airtel and RCOM have refrained from entering into any aggressive marketing campaigns. They believe that MNP would have very little impact on the market. Going by the example of Haryana, where MNP was launched in November last year, less than 1% customers changed their operator. Whether Idea's marketing efforts bear fruits for the company, only time will tell. But this will definitely shrink its margins as advertising costs would shoot up in quarters to come. Telecom stocks are currently trading in the mixed. Bharti and RCOM are trading in the red, while Idea is witnessing some buying interest.

Auto stocks are currently trading in the green. Stocks of Hero Honda, Maruti Suzuki and Tata Motors are all trading in the positive zone. Auto major, Bajaj Auto plans to fire all its cylinders to challenge the market leader Hero Honda. The company has appointed 135 dealers in smaller cities and towns. It earlier had only 25 dealers in this area. The company also plans to offer special finance schemes for rural customers, even if they do not have a bank account. As per its management, this would help the company address a larger market. It would strengthen the company's position in the semi-urban and rural markets that accounts for nearly two-thirds of the two-wheeler sales of the country. Currently, Bajaj Auto holds a market share of 27% as compared to the market leader Hero Honda, which has a market share of nearly 54%. With such initiatives, the market share of Bajaj is bound to increase in times to come. However, it would be interesting to see how Hero Honda would counter this strategy. In any case, two wheeler market is just going to get more competitive in times to come.