Asian markets in the green

Fri, 25 Feb 09:30 am

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After reacting severely to the Libyan crisis yesterday, all the major Asian markets have opened the day on a positive note. Markets in Hong Kong (up 1.49%), Japan (up 0.42%) and Indonesia (up0.38%) are the main gainers. Following the cues from Asia, Indian markets have also opened the day on a firm note. Auto and banking stocks are leading the gains. However, IT stocks are trading in the red.

The BSE-Sensex is trading higher by around 69 points (0.4%), while the NSE-Nifty is up by around 33 points (0.6%). Mid and small cap stocks are also trading firm, with the BSE Midcap index and BSE Small cap index up by 0.4% and 0.3% respectively. The rupee is trading at 45.41 to the US dollar.

Oil & gas stocks have opened the day on a mixed note with BPCL and HPCL trading firm, while Cairn India and RIL are trading in the red. Oil major, ONGC's first venture into power projects is slated to be completed by December this year. The company's first power venture is the 727 MW gas based power plant that it is setting up at Tripura. It was scheduled to be completed by next year but will actually be completed almost a year before schedule. As per the management, the project will start contributing towards the sales as well as the profits of the company a year in advance. This was thanks to the MoU (Memorandum of Understanding) signed between ONGC and the Bangladesh government, that allowed ONGC to transport the heavy equipment for the power plant using Bangladesh's waterways. ONGC has also asked BHEL to supply the two turbines for the plant simultaneously. This will also help in saving the project time. The total cost of the project is expected to be Rs 85 bn.

Auto stocks have opened the day on a mixed note with Tata Motors and Amtex Auto trading firm. However, Hero Honda and Maruti Suzuki are facing selling pressure. The auto sector has seen a massive rise in raw material costs. Commodities such as steel, rubber, aluminium, copper, nickel have all shot in the range of 20-45% YoY in November-February period. Key commodities such as steel and rubber have touched their all-time highs. As a result of this, car companies are likely to raise prices by up to 2-3% next month. This would mean an effective increase of about Rs 10,000 for cars such as Maruti Swift, Hyundai i20 and Honda Jazz. The premium models like Toyota Camry, Skoda Superb and others will be costlier by over Rs 25,000. Maruti Suzuki had raised prices by up to 2.4% in January for most of its cars to battle the rising input costs.

The government is also planning a 2% hike in excise duty across the auto sector to take it to the pre-stimulus level of December 2008. If this is implemented, it will automatically force all auto companies to pass on the cost to customers in the same ratio.