Investors prefer small, midcaps

Mon, 2 Jul 01:30 pm

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The Indian stock markets continued to trade marginally below the neutral zone during the post noon trading session. Currently stocks from the realty, consumer durables and engineering spaces are leading the pack of gainers while those from the auto and Oil and gas sectors amongst the top underperformers.

The Sensex today is trading lower by about 20 points (down 0.1%), while the NSE-Nifty is trading lower by about 5 points. On the other hand, investors seem to prefer stocks from the BSE Mid Cap and BSE Small Cap indices as they are trading higher by about 0.7% and 0.8% respectively. The rupee is trading at 55.78 to the US dollar.

Software stocks are trading mixed with HCL Technologies Ltd, NIIT Ltd and Mahindra Satyam being the biggest gainers. However, Info Edge and Tata Consultancy Services (TCS) are trading weak. As per a leading financial daily, the Indian Information Technology (IT) companies are facing a strange situation these days. On one hand, several companies are recruiting fewer employees and delaying the joining of freshers, recruited in last financial year. On the other hand, they are facing a talent crunch. How? The fact of the matter is companies in the sector are now shifting their focus from their tradition business of application development and maintenance. And now they are focusing on new themes such as analytics, big data, cloud and mobility which are expected to be new growth drivers for their business. As per industry experts, since these are the emerging themes, Indian software companies are facing difficulties in getting the right talent in this field due to inadequate supply in the market. However, good thing is that many companies have already started allocating a lot of fund towards training of their employees in these areas. And rightly so. Indian IT companies would do well if they focus on nurturing new talents for moving up the value chain.

Banking stocks are currently trading firm led by State Bank of India (SBI), Kotak Bank and Axis Bank. A leading business daily has reported that banking major HDFC Bank is looking at strongly expanding its credit card base going forward. As per the head of the bank's credit cards business, HDFC Bank is adding close to 90,000 to 100,000 credit cards a month. These numbers are believed to be double than those of the credit card industry. The target is to launch over 1 m cards this fiscal. HDFC Bank's optimism relating to the credit card business seems to be on account of its strong market share. The total number of credit cards in the country is pegged at about 18 m, with HDFC Bank's card base pegged at 5.6 m. As per the bank's management, HDFC Bank witnessed a 60% growth in spending through credit cards in FY12 as compared to the industry's overall spending of about 10 to 11%. For the current fiscal, the same target stands at about 15 to 20%. The bank expects online shopping to provide the additional boost. The bank expects the same to contribute to about half of the spending in a period of three years as compared to the current level of 20 to 25%.