Small, midcaps in demand today

Tue, 1 Jul Closing

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The Indian markets continued to trade in a range bound manner during the previous two hours of trade, ending the day on a firm note. The BSE-Sensex closed higher by about 103 points or 0.4% today, while the NSE-Nifty closed higher by about 23 points or 0.3%. Stocks from the metals and automobiles spaces were in favor today, while those from the information technology and oil and gas spaces were the least in demand. Midcap and smallcap stocks did well too as the BSE Mid Cap and BSE Small Cap indices closed higher by about 0.6% and 1.2% respectively.

Stock markets in other parts of Asia ended the day on a mixed note with Hong Kong closing lower by 0.1%, while China and Japan ended higher by about 0.1% and 1.1% respectively. The rupee was trading at Rs 60.14 to the dollar at the time of writing.

Auto stocks ended the day on a firm note led by Maruti Suzuki, Tata Motors and Mahindra and Mahindra (M&M). M&M released its sales volume numbers for the month ended June 2014 today. Barring the passenger vehicle segment, sales volumes of all other segments rose on a YoY basis. The company's passenger vehicles segment (which includes utility vehicles and Verito) declined by about 3% YoY during the month. As for the 4-wheeler commercial vehicles and 3-three wheeler segments, the same rose by 3% and 6% YoY respectively. The company's export volumes rose by 7% YoY. On an overall basis, M&M's sales volumes were up by 1% for the month. In the year till date, total volumes were lower by 8% YoY. As for the tractor segment, total sales in June this year were higher 8 % YoY at 29,884 units. Growth was led by domestic sales volumes in this segment. The stock of Mahindra and Mahindra ended the day higher by about 4% today.

Apart from positive data from the auto spaces (with Maruti Suzuki reporting strong sales volume growth in the month gone by), the markets seem to be bullish led by favorable factory activity data as well. As reported by a leading business daily, the Indian factory activity expanded at its quickest pace since February this year, while output rose at its fastest in nearly eight months. It is believed that the growth was led by a jump in export orders and that domestic demand remained weak. As reported, the HSBC Manufacturing Purchasing Managers' Index (PMI) rose to 51.5 in June from 51.4 in May. Further, new export orders pushed the output sub-index to 52.4 from 51.7 seen in the preceding two months. Whether this trend will continue going forward or not is something that will need to be gauged. All eyes are on this year's Union Budget.