Markets begin on a strong note

Mon, 8 Mar 09:30 am

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The Indian markets have started today's session on an extremely strong note. The benchmark indices opened above the breakeven mark and have managed to hold on to their gains since then. Other key Asian markets are trading in the green with Hong Kong (up 1.9%) leading the pack of gainers. The US markets closed higher by 1.2% last Friday.

Currently in India, heavyweights from the BSE-Sensex are trading strong with auto and construction stocks attracting buying interest. The BSE-Sensex is trading higher by around 145 points, while the NSE-Nifty is up by about 45 points. Buying is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 1% and 1.2% respectively. The rupee is trading at 45.45 to the US dollar.

Energy stocks have opened the day on a positive note. Gainers here include Gujarat Gas and Indraprastha Gas. As per a leading business daily, natural gas transmission major Gail has commissioned its first wind farm in Gujarat. The 4.5 MW plant in Sinoi, Kutch will go on stream by April this year. The company plans to enter the power generation space through conventional and non-conventional energy sources. In fact, it plans to set up two natural gas-based power plants in Usar, Maharastra and Bettiah, Bihar. In our opinion, Gail's foray into power generation is driven by a desire to diversify its business as well as avail government benefits such as tax incentives available to projects based on renewable energy.

Auto stocks have opened the day on a positive note. Gainers here include Hero Honda and Tata Motors. As per a leading business daily, Suzuki Motor Corp has increased its stake in Maruti Suzuki by 0.8% to 55%. It may be noted that companies are allowed to make creeping acquisitions of up to 5% a year. However, any increase beyond 55% will require Suzuki to make an open offer for another 20%. Given that the Japanese auto giant has raised its stake right up to the permitted threshold, in our opinion it raises the question of whether it seeks full control over India's largest carmaker. There is ample motive for doing so. The Indian auto market outshines its troubled global counterparts. Maruti Suzuki contributes nearly 80% of Suzuki's profits. Interestingly, German auto giant Volkswagen has recently picked up a 20% stake in the Japanese group. Hence, the increase in stake in Maruti Suzuki could be part of a larger strategic plan between Volkswagen and Suzuki Motor.