Firm start to the week

Mon, 11 Aug Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

The Indian stock markets ended the day on a firm note today. The BSE-Sensex ended higher by about 190 points or 0.8%, while the NSE-Nifty ended higher by about 0.8%. Barring power and FMCG stocks, gains were seen across the board with auto and realty stocks being the most in demand. The BSE Mid Cap and BSE Small Cap indices ended the day on a firm ntoe too, with the indices ending higher by about 0.6% and 0.8% respectively.

Stock markets in other parts of Asia ended the day on a firm note with Japan, China and Hong Kong down closing higher by about 2.4%, 1.3% and 1.3% respectively. The rupee was trading at Rs 61.12 to the dollar at the time of writing.

Real estate stocks were in demand today with DLF, Anant Raj and HDIL leading the pack of gainers. Gains in the stocks were largely due to SEBI's approval of setting up and listing REITs or real estate investment trusts in India. Sums totaling up to as much as Rs 600 bn are expected to be unlocked due to the same. The major real estate players are expected to gain significantly as the much needed liquidity will be provided to them through this route. It is expected that major players such as DLF will benefit from such a development given its exposure to the commercial segment. It is also believed that the regulator has allowed REITs to invest up to 20% of their assets in mortgage backed securities as well as under-construction assets and equity and debt of real estate companies. These would further be a positive development for the debt heavy sector. However, the launch of REIT is still some time away. Given the requirement for better transparency, such a development is expected to provide some moderation in prices. Not to mention the high debt levels of some players forcing them to sell of properties at lower prices; having said that, the debt free realty players will be in a better position to command higher prices.

Stocks of tractor manufacturers ended the day on a mixed note with Mahindra and Mahindra leading the pack with gains of about 6%, while Escorts and VST Tillers ended lower. As reported by a leading business daily, tractor sales volumes have been impacted by the poor monsoons this year, leading companies to lower their forecasts for the full year. For example, market leader Mahindra and Mahindra has lowered growth forecasts of the segment to 5% from earlier expectation of 8% to 10%. As for Escorts, it expects volumes to remain flat in the current year. It may be noted that in FY14, volumes were up by 20% YoY. Tractor volumes declined in the quarter ended June (lower by 1% overall), which is the first decline seen in five quarters. While sales volumes of smaller tractors (those fitted with engines of 25 HP and below) came in higher by 11%, sales of 25 HP + tractors declined by 7% YoY.