Indian stock markets open weak

Wed, 21 Mar 09:30 am

   Previous Close   

   Pre-Open   

   11:30 am   

   01:30 pm   

   Closing   

Asian stock markets have opened the day on a weak note with stock markets in South Korea (down 0.7%), China (down 0.5%) and Japan (down 0.5%) leading the losses. The Indian stock markets have also opened the day on a weak note. Stocks in the metal and auto space are the major losers. However, stocks in the IT and consumer durables sectors are trading firm.

The BSE-Sensex is down by around 23 points (0.1%), while the NSE-Nifty is down by around 12 points (0.2%). However, mid cap and small cap stocks are trading in the positive zone, with the BSE Mid cap and the BSE Small cap indices up by about 0.1% and 0.2% respectively. The rupee is trading at Rs 50.57 to the US dollar.

Auto stocks have opened the day on a weak note with Tata Motors (Telco) and Maruti Suzuki leading the pack of losers. As the price disparity between fuels like diesel and petrol have increased with the latter getting a lot more expensive, diesel cars have gained a lot of popularity. However, entry-level petrol cars such as Maruti Suzuki's Alto, Tata Motor's Nano and Hyundai's Eon are gaining significant acceptance. Rising interest costs and high fuel prices have adversely affected the purchasing power of many customers. As a result, factors such as lower initial cost, higher fuel efficiency and lower maintenance costs are major driving forces that have given a boost to demand for these cars. In the month of February 2012, sale of entry-level cars, that is, cars that cost less than Rs 3.5 lakhs, was over 50,000 units.

Power stocks have opened the day on a weak note with Reliance Power and Adani Power leading the losses. As per a leading financial daily, four states have demanded a fine of Rs 4 bn from Coastal Andhra Power, a special purpose entity (SPV) set up by Anil Dhirubhai Ambani Group controlled Reliance Power. Reliance Power had set up this SPV for a 4,000 megawatt (MW) power plant, one of the country's four ultra mega power projects (UMPP). However, the project has been in a state of limbo for about nine months. This, in turn, has caused irreparable losses to electricity procurers, which includes the states of Maharashtra, Andhra Pradesh, Tamil Nadu and Karnataka. They have threatened to encash bank guarantees, terminate power purchase agreements and recover the land allotted for the coal-fired project. In response to this, Reliance Power moved the Delhi High Court and obtained a stay on the notice to invoke bank guarantees of Rs 3 bn and to terminate the power purchase agreements.