Equity markets languish in the red

Thu, 21 Feb 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

As broad based selling continued to put pressure, Indian share markets declined further in the post-noon trading session. Barring consumer durables, all the sectoral indices are trading negative with metal, realty and FMCG stocks leading the pack of losers.

BSE-Sensex is down by 240 points and NSE-Nifty is trading down by 72 points. While BSE Mid Cap is trading down by 1.22%, BSE Small Cap index is trading down by 1.25%. The rupee is trading at 54.50 to the US dollar.

Majority of steel stocks are trading are trading in the red, with Maharashtra Seamless and JSW Steel being among the top losers. As per a financial daily, Steel Authority of India Ltd. (SAIL), India's second largest steel producer, may face tough times on back of delay in projects, lower sales volumes and wage hike. The company is looking to increase the captive consumption of steel, which will help improve the margins. However, delay in execution of the projects will impact the overall performance of the company. In addition, SAIL's inventory levels have gone up by 0.3 MT to 1.7 MT in the December quarter due to lower sales volumes. This is also attributable to weak demand for steel. Owing to this even if the company's production picks up, it might be difficult for it to increase its sales in line with the rise in production. The company has also increased the price per tonne since January this year. However, competition from Chinese players and discounts offered by domestic companies might make it difficult to sustain the price rise. Over and above, the company had to set aside Rs 5 bn for CY12, on the back of indecisive negotiations on wage revision for non-executive employees. The stock of SAIL is trading down by 2%.

Auto stocks are trading weak led by Tata Motors and Ashok Leyland. As per a leading daily, Ashok Leyland will be opening a research centre in Warwickshire, England. The center will be opened at Nuneaton's MIRA Technology Park to benefit from the area's set of technical skills. Ashok Leyland already has facilities in Leeds, Czech Republic and the United Arab Emirates, in addition to its Indian operations. This initiative would help in creating 30 jobs at the research centre. As per the director of the Technology Park, these jobs are not just any 30 jobs but important ones. Ashok Leyland is amongst first few businesses to open at the park. In the meanwhile, in India, the automobile company has recently opened a driver training institute at Chhindwara Madhya Pradesh. This is equipped with facilities for heavy commercial vehicle driver training such as the vehicles themselves, tracks of various configurations, classrooms, trainers and a state-of-the-art driver training simulator. The stock is trading down by 1.7%.