IT stocks push markets lower

Fri, 27 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 in the negative territory. Other key Asian markets are in the red with Japan (down 0.9%) leading the pack of losers. The US markets closed lower by 0.7% yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading weak with software majors facing the brunt of selling activity. The BSE-Sensex is trading lower by around 50 points, while the NSE-Nifty is down by about 21 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading lower by 0.2% and 0.3% respectively. The rupee is trading at 46.84 to the US dollar.

Energy stocks have opened the day on a positive note. Gainers here include GAIL and Castrol. As per a leading business daily, GAIL plans to put up gas-based power plants in Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh. The company has undertaken a feasibility study for the proposed units and a plan is likely to be finalised in three to four months. The company is keen on taking advantage of its vast pipeline network. It already has land and other infrastructure available for these units. The company will prefer power plants with smaller capacity with an investment in the range of Rs 350 m to Rs 400 m for each megawatt (MW). The four plants will generate about 250 MW each and would require 2.5 m standard cubic metres of gas per day. The gas for these plants would either come from a domestic source or from imported liquefied natural gas. It may be noted that GAIL has already invested Rs 11 bn in the erstwhile Dabhol power project as well as Gujarat State Energy Generation. Besides the gas-based plants, the company is also interested in a commercial foray into wind and solar power.

Auto stocks have opened the day on a strong note. Gainers here include Hero Honda and Eicher Motor. As per a leading business daily, M&M will set up an assembly line at its Chakan plant for making Ssangyong sport utility vehicles (SUV). It is considering two products from the Ssangyong portfolio, Korando C and Rexton, to launch in India. While Korando C is a compact SUV, Rexton is a large-sized premium SUV. The Chakan plant can manufacture all M&M products, ranging from a 0.5 tonne cargo vehicle to 49 tonne Mahindra Navistar heavy truck and SUVs. It may be noted that M&M is in the final stages of acquiring the troubled South Korean automaker. It expects to seal the deal before the end of November, after it completes the detailed due diligence process, expected to get over by next month.