Markets open on a volatile note

Wed, 28 Jul 09:30 am

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The Indian markets have started today's session on a volatile note. The benchmark indices opened above the breakeven mark, but soon moved into the negative territory. However, these have managed to return to the green since then. Other key Asian markets are in the green with Japan (up 1.9%) leading the pack of gainers. The US markets closed higher by .1% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading strong with auto and energy majors attracting investors' interest. The BSE-Sensex is trading higher by around 15 points, while the NSE-Nifty is up by about 5 points. Buying interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.5% respectively. The rupee is trading at 46.75 to the US dollar.

Banking stocks have opened the day on a positive note. Gainers here include Canara Bank and Bank of India. Union Bank has announced its 1QFY11 results. The bank has reported a 16% YoY growth in interest income in 1QFY11 on the back of 30% YoY growth in advances. The bank tapped SME clients during the quarter in order to hedge the slowdown in the growth of retail and agriculture segments. The higher proportion of CASA enabled the banks to get back to its long term average net interest margins (NIMs) that were impacted by the bulk deposit rates in FY10. Its NIMs improved from 2.3% in 1QFY10 to 3% in 1QFY11 due to re-pricing of assets. Other income fell by 15% YoY due to lower treasury income. The bank's capital adequacy ratio stood at 12.6% as per Basel-II at the end of 1QFY11. Its net NPA ratio inched to 0.9% in 1QFY11 from 0.7% in 1QFY10.

Auto stocks have opened the day on a positive note. Gainers here include Escorts and Ashok Leyland. M&M plans to expand its presence into the compact tractors category that is currently dominated by local unorganised players. It has launched Yuvraj 215, the country's first 15 horse-power (hp) tractor targeting the small and marginal farmer with an average landholding of two to five acres of land. It has initially been introduced in Gujarat at Rs 175,000. With nearly 82% of the farmer population in Indian being small and marginal farmers, there is ample opportunity to grow. In fact, the company plans to launch the Yuvraj in other major markets like Maharashtra, Uttar Pradesh, Bihar, Tamil Nadu and Madhya Pradesh within this year. It may be noted that M&M is the market leader in the tractor segment for the last 27 years and sold 166,000 units in FY10.