Indian market indices open in green

Thu, 24 May 09:30 am

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Asian stock markets have opened the day on a mixed note with stock markets in Hong Kong (down 0.6%), Taiwan (down 0.5%) and China (down 0.3%) leading the losses in the region. However, markets in Malaysia (up 0.2%) and Indonesia (up 0.2%) are trading in the green. The Indian equity market indices have opened the day on a positive note. Stocks in the oil and gas space are leading the pack of gainers owing to the steep Rs 7.5 per litre hike announced for petrol prices. However, IT and auto stocks are trading in the red.

The Sensex today is up by around 32 points (0.2%), while the NSE-Nifty is up by around 10 points (0.2%). The mid and small cap stocks are trading in the green as well with the BSE Mid cap and BSE Small cap indices up by around 0.05% and 0.2% respectively. The rupee is trading at Rs 56.08 to the US dollar.

Auto stocks have opened the day on a mixed note with Maruti Suzuki, Hero MotoCorp and Ashok Leyland leading the losses. Factors such depreciating rupee, high interest rates and increasing fuel prices have adversely affected the growth prospects of the auto industry. As per data from Society of Indian Automotive Manufacturers, in the financial year 2011-12 while passenger vehicle segment grew by just 4.66% year-on-year (YoY), the passenger car segment grew at a paltry rate of just 2.19% YoY. So the latest hike in petrol prices to the tune of Rs 7.5 per litre is likely to hurt the demand further. Moreover, given the Rs 34 per litre differential between diesel and petrol prices, the demand is expected to skew further towards diesel variants. According to industry estimates, presently the demand splits 20:80 in favour of diesel vehicles.

Indian pharma stocks have opened the day on a mixed note with Natco Pharma and Aurobindo Pharma trading firm. However, Indoco Remedies and J B Chemicals are facing selling pressure. As per a leading financial daily, Indian drug manufacturer Lupin Ltd is voluntarily recalling 10,800 pouches of a contraceptive drug in the US. This was after revelations of impurities during a stability test. As per the US Food and Drug Administration (FDA), the recall of the drug is ongoing. The drugs were manufactured at the company's Indore facility in Madhya Pradesh. It is reported that the recall is not likely to cause any material financial impact on the company. Moreover, the recall falls under the FDA's Class III category. This means that the use of the drug is unlikely to have any adverse impact on the health of consumers. It must be noted that such recalls are common in the US. They do not necessarily indicate a problem in the quality of the drug.