Oil & Gas cheers the markets

Mon, 14 Mar 11:30 am

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Indian stock markets continued to trade in the positive on buying interest in heavy weights over the last two hours of trade. Stocks from the oil & gas and metals space are trading firm while stocks from the auto and IT space are trading weak.

The BSE-Sensex is up by 150 points while NSE-Nifty is trading 45 points above the dotted line. Both BSE Midcap and BSE Small capindices are up by 0.3% and 0.4% respectively. The rupee is trading at 45.17 to the US dollar.

Auto stocks are trading weak led by Maruti Suzuki and Bajaj Auto. Maruti Suzuki is down by nearly 1.5% on fears that the earthquake in Japan and the consequent Tsunami may hurt the carmaker's imports. It may be recollected that, the company imports its luxury sedan Kizashi from Japan. Kizashi has received 400 bookings in the first month of its launch. On the back of such a favourable response, the auto company has placed another shipment order of 350 cars. Also, as per a financial daily, Maruti Suzuki is likely to cross the 1 crore production mark next week. This comes 27 years after it rolled out its first Maruti 800 model from Gurgaon. Going forward, the company is aiming at producing another one crore cars in the next 6-7 years. Maruti took 22 years to produce the first 50 lakh units and the remaining units were produced within less than 6 years.

Maruti has set up two new plants at Manesar near Gurgaon at an investment of Rs 36 bn. The existing annual production capacity at Gurgaon is 8.5 lakh units. The company had recently ramped up its production by about 10% to over 1.1 lakh units every month. Suzuki Motor Corporation which owns a 54.2% stake in Maruti Suzuki India has invested Rs 90 bn in new facilities during 2005-10. It is also investing Rs 25 bn for its K-Series engine plant and establishing an R&D centre at Rohtak, Haryana.

Banking stocks are trading firm led by Union Bank and Yes Bank. As per a leading financial daily, State Bank of India (SBI) is expected to come out with a Rs 200 bn rights issue in 1QFY12. However, this issue is still to get the government's approval. It may be noted that the government is currently holding 59% stake in the bank. If the rights issue is cleared, then the government would also subscribe to the issue to maintain its stake holding at the current levels. However, last August, the Parliament had passed a Bill which would enable SBI to sell shares to boost its capital and allowed the government to reduce its stake to 51%.

SBI has recently been on a drive to raise capital to fund its growth. Last month the bank had issued Rs 20 bn retail bonds. The bank also plans to increase its manpower. As per the bank's spokesperson, SBI plans to recruit 5,000 youths in FY12.