Mid & small caps outperform

Wed, 6 Mar Closing

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Indices in the Indian stock market managed to hold on to their gains during the closing hours and thus, end the session on a high. While BSE-Sensex edged higher by around 110 points (up 0.6%), gains on the NSE-Nifty came in at around 35 points. BSE Mid Cap and BSE Small Cap indices fared much better than their large cap counterparts, closing higher by 1.1% and 1.5% respectively. Around three stocks gained for every two that closed the day in the red on the Sensex.

Almost all the Asian indices closed the day in the positive with Europe too trading in the green currently. The rupee was trading at Rs 54.8 to the dollar at the time of writing.

With the US indices hitting all time highs, the buoyancy seems to be rubbing off on Indian stocks as well. However, it should well be noted that just as the fundamentals of the US economy remain far from strong, the same in India too have not changed overnight. Thus, investors go overboard at their own peril. The idea is to stick to good quality stocks and buy them at reasonable valuations. Picking up any stock in the hope that liquidity would take them higher is certainly not a winning strategy in the long term.

Ashok Leyland, India's second largest manufacturer of commercial vehicles is seriously considering the idea of launching an electric version of its light commercial vehicle (LCV) product, Dost. But first, it is working on launching a higher tonnage version of the model which will be followed by passenger and CNG versions. Thus, it will be at least a year before the electric version is launched. It should be noted that Dost is the maiden offering of the company in the LCV space, which the company entered in 2011 by teaming up with Japanese major Nissan. The response has been good so far with the company maintaining a run rate of around 9,000 vehicles per quarter which will be increased to 11,000-12,000 once the supply constraints are resolved. The stock closed marginally higher today.

Hindustan Petroleum Corporation Ltd (HPCL), one of India's largest oil refiners will soon sign an MoU with the Government of Rajasthan for setting up an oil refinery in the state. The refinery, 19th in the country, will be set up at an investment of close to Rs 360 to Rs 400 bn and will have a production capacity of around 9 m tonnes. The process of land acquisition is underway in the city of Barmer where the refinery will be put up. It should be noted that Barmer ranks second in crude oil production in the country and therefore the refinery is likely to give an important locational advantage to HPCL. The stock of HPCL closed nearly flat today.