Smallcap outperform their larger peers

Thu, 5 Jul 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

The Indian equity markets traded in a range bound manner, albeit marginally above the dotted line, during the post noon trading session. Stocks from the capital goods, FMCG and pharma spaces are amongst the top performers at the moment, while those from the realty and IT sectors are the top losers.

The Sensex today is trading higher by about 20 points (0.1%), while the NSE-Nifty is trading flat. The BSE Mid Cap and BSE Small Cap indices as they are trading higher by about 0.9% and 1.4% respectively. The rupee is trading at 55 to the US dollar.

Auto stocks are currently trading firm led by Ashok Leyland, TVS Motors and Tata Motors. As per a leading financial daily, domestic car manufacturers in a bid to offset the impact of high import costs from hardening rupee are increasingly focusing on raising exports to the non-European markets. Car companies usually import components and steel which are denominated in dollar and yen. Reportedly, imported components constitute 5%-30% of the cost of the final product. As car companies battle sluggish demand in the domestic markets and the crisis-ridden Eurozone countries, they have now shifted focus towards markets such as Africa, Middle East and South-East Asia. Recently, Maruti Suzuki began supplying knocked-down units of the Ertiga MPV to Indonesia for local assembly and is contemplating exports to other South-East Asian markets such as Thailand and Malaysia. It is also developing new markets for the recently launched Swift Dzire. In FY12, exports to non-European countries increased by 6% to 84,000 units while exports to Europe fell by 27% to 43,000 units. This strategy will enable Maruti to protect margins, expand footprint as well as scale up its underutilized petrol engine capacity.

Hyundai Motors, the largest exporter of cars from India, is seeing decent growth in its export markets as compared to domestic sales that remained flat. As per Hyundai, there has been robust demand for i10 in Latin America and for Eon in Africa, but the company has already been exporting to 120 countries across the world. Ford has said that it will accelerate its export strategy as soon as its second plant in Gujarat gets commissioned. The company wants to expand the export market of its Figo model from 35 to 50 countries.

Banking stocks are currently trading mixed with Canara Bank, Union Bank and ICICI Bank leading the pack of gainers, while Allahabad Bank, Bank of Baroda and Bank of India are amongst the top underperformers at the moment. Private sector bank, ICICI Bank is in the news on account of it tying up with ITM University (based in Chhattisgarh) to train potential candidates and ready them for banking jobs. As part of the pact, the bank will launch a specialised certificate course in Retail Banking Management. This course will be conducted on a fully residential basis at the university campus at Raipur. This is a positive development for the bank considering that it would be able to source its employees specialising in the retail banking field. It is reported that the course would be of three months duration - of which, one month would be in-class based training and the balance duration would be through internships at various locations/ branches of the bank. As reported by the leading business daily, this industry academia partnership is a step by the bank towards creating a talent pool to meet the growing demand of pre-skilled human capital by the banking industry.