Autos drive down Indian equity markets

Mon, 2 Jul 09:30 am

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Most of the Asian equity markets have opened the day on a positive note with markets in Hong Kong ( up 2.19%),Taiwan (up 0.8%) and Indonesia (up 0.9%) leading the pack of gainers in the region. The Indian equity market indices have opened the day on a negative note. Oil and gas and auto are witnessing maximum losses.

The Sensex today is down by around 35 points (0.2%) and the NSE-Nifty is down by around 10 points (0.2%). However, both Mid cap and Small Cap stocks are trading in the green as well with the BSE Mid Cap and BSE Small Cap indices up by around 0.5% each. The rupee is trading at Rs 55.59 to the US dollar.

Steel stocks are trading mixed with Tayo Rolls and Jindal Saw Ltd leading the pack of gainers while Gujarat Mineral Development and Mah. Seamless are trading weak. As per a leading financial daily, Steel Authority of India Ltd. (SAIL) plans to expand the capacity of its Gua iron ore mine in Jharkhand to 10 million tonnes per annum (mtpa) and put up a 4 mtpa pelletisation plant. For this, SAIL will be investing around Rs 30 bn. Out of this, the expansion of the mine will cost around Rs 20.9 bn while the pellet plant will need an investment of around Rs 8.7 bn. The Gua mine has reserves of 142 million tonne (MT) and a production capacity of 2.4 mtpa. However, it could produce only 0.5 MT during the last fiscal for lack of forest and environment clearances for most part of the year and has remained close since June last year. The Gua mine supplies ore to SAIL steel plants in Burnpur and Durgapur (both in West Bengal) among others. As per a company official, the techno-commercial discussions for capacity expansion are in progress and the contracts to develop the mine are expected to be finalized by October 2012. SAIL will require additional 16 mtpa of iron post capacity expansion. As of now, it mostly sources its iron ore requirements from captive mines.

Auto stocks are trading in the red with Hero MotoCorp and TVS Motors trading the weakest. As per a leading financial daily, key automakers have reported the monthly sales volume numbers for the month of June. Mahindra & Mahindra Ltd. (M&M) registered a 16.1% year on year (YoY) in its sales for June with domestic sales accounting for 15% YoY growth and exports recording 31% YoY growth. Its passenger vehicles segment registered a growth of 23% YoY. The management expects the demand for utility vehicles industry to continue during the current financial year and hopes for no major changes in the policies, especially fuel prices. Tata Motors however reported a 3% YoY decline in total sales volumes for June. In the domestic segment, the sales of commercial and passenger vehicles for the month declined by 5% YoY while sales of commercial vehicles was up by 4% YoY. The company's exports for the month witnessed a growth of 19% YoY. The sales volumes of TVS Motor for June were also down marginally by 9% YoY. Its exports also declined by 25% YoY.