Small, midcaps not in favour today

Tue, 17 Jul 01:30 pm

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While the Indian Indian equity markets witnessed a volatile post noon trading session, they are currently trading well above the dotted line. Stocks from the defensive sectors such as healthcare and FMCG seem to be in favour at the moment, while those from the IT and auto spaces are amongst the top underperformers at the moment.

The Sensex today is trading higher by about 55 points (0.3%), while the NSE-Nifty is trading higher by about 5 points (0.1%). The BSE Mid Cap and BSE Small Cap indices are however trading lower by about 0.3% each. The rupee is trading at 55.12 to the US dollar.

Stocks from the healthcare sector are leading the pack of gainers with the BSE-Healthare index trading higher by 1.2%. Amongst the stocks forming part of the index, Cadila Healthcare, Biocon and DR. Reddy's are leading the pack of gainers. Cadila Healthcare is trading firm on the back of news of the US Food and Drug Administration (FDA) revoking the warning letter it had sent to the company. As per a leading business daily, US FDA has now found the company's facilities at Moraiya to be acceptable and as such has given the facility a clearance. In June last year, the US FDA had issued a warning letter to Cadila, citing non-conformity of the facilities with the US FDA norms and has accused the company of drug products being adulterated and also believed to raise concerns over that the procedures for keeping the manufacturing area completely sterile.

Auto stocks are currently trading weak with the BSE-Auto Index trading lower by 0.4%. TVS Motors, and Bajaj are amongst the top losers at the moment. The Centre for Monitoring Indian Economy (CMIE) expects automobile production to grow by 9.6%, a percentage point lower as compared to its earlier estimate for FY13. The reason for the same has been the prevailing high interest rates coupled with higher taxes and therefore higher prices of vehicles. All this, along with overall concerns related to the slowdown in the domestic economy is leading to customer to defer their decision to purchase new vehicles. As per the report, production of commercial vehicles is expected to grow by about 9% during the fiscal as compared to about 20% last year. On the passenger vehicle side, the report expects production to increase during the second half of the fiscal, once the festival seasons kicks in. As per the report, production of passenger cars and vans is expected to increase by about 10% this fiscal, while that of multi-utility vehicles is expected to grow faster at clip of about 20%. As per CMIE, production of two-wheelers is expected to grow by a moderate 10% during the year.