Realty stocks lead the mkts higher

Wed, 30 Mar 09:30 am

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Asian stock markets have opened the day on a strong note. Singapore (up 1.4%), Hong Kong (up 1.3%) and Japan (up 1.2%) are leading the pack of gainers. However, China (down 0.4%) is facing selling pressure. The Indian stock markets have opened the day on a strong note. Stocks in the realty and healthcare space are the main gainers.

The BSE-Sensex is trading higher by around 150 points (0.8%), while the NSE-Nifty is up by around 35 points (0.6%). Midcap and small cap stocks are trading in the positive as well, with the BSE Midcap and BSE Small cap indices up by about 0.7% and 0.9% respectively. The rupee is trading at 44.74 to the US dollar.

Auto stocks have opened the day on a good note. Mahindra & Mahindra, Maruti Suzuki and Tata Motors are the leading gainers. India's two-wheeler majors Bajaj Auto and Hero Honda are all geared up for grabbing a larger share in the profitable premium segment. Hero Honda has seen its market share in this segment dwindling in recent times. As a result, the management has decided to rollout strategic initiatives to recapture the lost share. Due to the intense competition, Bajaj Auto would have no other choice but to follow suit or else they would be at a risk of losing their market share in the segment. As per Society of Indian Automobile Manufacturers (SIAM), Hero Honda's overall market share is down to 54% as at the end of Feb 2011. This is down from 75% as at the end of FY09. To help boost its market share, Hero Honda plans to take on several initiatives that include setting up special dealer networks for the different categories in two-wheelers, offering better facilities for the mass market bike segment, and starting a used motorcycle business, which would be the first of its kind in the country. It is also looking at additional efforts like revamping its research facilities and creating different marketing verticals.

IT stocks have opened the day on a positive note as well with TCS, Mphasis and Infosys heading the list of gainers. According to TCS, the country's largest software services provider, the economic recovery of the US is faster than that of Europe. It expects strong growth in the US to offset the impact of any disruption elsewhere. Though Europe is lagging behind, it still remains a key strategic market from a business perspective. The European market accounts for about 27% of TCS's revenue, while the US market contributes about 55%. The Indian market contributes about 8-10% of the total revenues. However, the company does not expect any substantial growth in the domestic market. TCS has also confirmed that Japan's disaster has had a small impact on company.

TCS raised prices in the last quarter of FY11 as demand for IT services picked up in segments such as retail and banking, financial services and insurance. The company's margins have improved over the past six to seven quarters in a row by at least 500 basis points (5%).