Indian share markets remain volatile

Mon, 10 Feb 01:30 pm

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Indian share markets continued to be hit by volatility and traded around the dotted line in the post-noon trading session. Barring IT, FMCG and metal, all the sectoral indices are trading in the green with realty, consumer durable and pharma stocks being the biggest gainers.

BSE-Sensex is up 3 points and NSE-Nifty is trading marginally up. BSE Mid Cap is trading 0.3% up and BSE Small Cap index is trading up by 0.5%. The rupee is trading at 62.1 to the US dollar.

Automobile stocks are trading mixed with Force Motors and Tata Motors being among major gainers and Maharashtra Scooters and Hero MotoCorp being the biggest losers. As per a leading financial daily, Maruti Suzuki will be building two huge vehicle stockyards, one each in Gujarat and West Bengal. The stockyards will act as additional factories and will help in cutting down the delivery time of cars from Gurgaon. The delivery period is likely to decline from the present seven days to one day. The company already has two stockyards in the country with a capacity of 10,000 vehicles and spread over 140 acres. The stockyard located near Bangalore caters to the southern market whereas the stockyard in Nagpur services the western market. Maruti Suzuki is also building its car crash testing site in Rohtak, Haryana along with its R&D centre there at a total cost of Rs 25 bn. The first phase of the centre has already been set up. Maruti Suzuki's stock is presently trading up 1%.

Public sector banks are trading mixed today. While IDBI Bank and Bank of Baroda are trading firm, United Bank of India is trading weak. As per a leading business daily, banks are expected to keep stringent norms to extend loans to telecom companies that win the ongoing spectrum auction. Banks have had bad experience of loan advances to telecom players in the last auction. For instance, by December 2013 there were 5 telecom players' debt recast proposals worth Rs 107.9 bn pending with corporate debt restructuring (CDR) cell. So this time banks plan to seek pledge of shares and spectrum as collateral instead of telecom license during 3G auction in 2010. As per a banker, telecom license is meaningless without spectrum and money can be recovered through sale of spectrum. Further, banks would also consider their exposure to groups and sector before loan approvals. Government may also insist public sector banks consider joint lending agreement in order to disperse risk from high value transaction. Telecom companies in total have bid worth Rs 565 bn for spectrum as of last week that would entail payment of Rs 150 bn upfront in the deferred payment system.