Metal stocks pull markets lower

Wed, 25 Aug 09:30 am

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The Indian markets have started today's session on a negative note. The benchmark indices opened below the breakeven mark and have stayed into the negative territory. Other key Asian markets are also in the red with Taiwan (down 1.9%) leading the pack of losers. The US markets closed lower by 1.3% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading weak with metal majors facing the brunt of selling activity. The BSE-Sensex is trading lower by around 40 points, while the NSE-Nifty is down by about 10 points. Selling interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading lower by 0.2% and 0.1% respectively. The rupee is trading at 46.94 to the US dollar.

Auto stocks have opened the day on a negative note. Losers here include TVS Motor and Tata Motors. As per a leading business daily, Maruti Suzuki is looking at manufacturing cars for other vehicle makers, both foreign and domestic. This would be on the lines of its current arrangement with Nissan. This move will help the company utilise it low cost of manufacturing advantage. However, it plans to make sure that the final product should be distinct from its own models. German auto giant Volkswagen is among the possible partners with which Maruti Suzuki could enter into such an arrangement. It may noted that although such arrangements have the potential to contribute to the volume of the company, they do not often assure a steady stream of revenue. A case in point is the subdued demand for Nissan's Pixo, which Maruti Suzuki supplies. Last year it supplied 50,000 units, but it is likely to come down to 20,000 units this year.

Hotel stocks have opened the day on a weak note. Losers here include EIH and Hotel Leelaventure. As per a leading business daily, the hotel industry is planning to increase room tariffs 10-15% from September this year. Hoteliers expect occupancies to improve with the onset of the key winter season. They hope it will help them recover from the slowdown that hit the hotel industry two years ago. Indian hotels traditionally increase rates before the crucial winter season every year. However, the economic slowdown and terrorist attacks in 2008 had hit hotel business in India and led to room rates crashing by 25-30% over the last two years. The current average level of room occupancies are in the range of 58-60% which is higher than the same period last year. It is expected to go up to 70% on an average, leading to an upward revision of room rates.