Energy & realty push markets lower

Tue, 31 Aug 11:30 am

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After starting today’s session below breakeven, the Indian indices are now languishing further in the red. Other key Asian markets are all trading in the negative territory as well with Nikkei (down 3.4%) leading the pack of losers. Currently, most heavyweights in the Sensex are trading weak while stocks from the FMCG space seeing some buying interest. However, stocks from oil & gas and realty space are trading negative.

Currently, the BSE-Sensex is trading down by around 145 points, while the NSE-Nifty is down by about 44 points. Mid and small cap stocks are also trading weak with the BSE-Midcap and BSE-Smallcap indices are trading up down by 1% each. The rupee is trading at 47.03 to the US dollar.

Auto stocks are mainly trading negative with TVS Motor and Exide Industries leading the losers. Mahindra and Mahindra (M&M) severed relationships with its US marketing and distribution partner Global Vehicles Inc (GV). And this news comes soon after M&M received the necessary certification to sell pick-up trucks in the US from the Environmental Protection Agency. GV had earlier filed a lawsuit against M&M in June, in a US district court for delaying its truck launch. The company also accusing M&M of holding back information about the launch and keeping it in the dark.

GV, has so far signed up more than 350 dealers and has spent more than US$ 35 m (Rs 1.6 bn) preparing for the launch. It stated that any attempt by M&M to terminate their contract would be invalid under US law. However an out-of-court settlement between the two companies is being seen as a viable option, since many of GV’s outlets were ready to start selling M&M’s vehicles. Setting up an alternative dealership chain would be time consuming and take a few months. Further, GV had also asked the court to restrain M&M from engaging with any other dealer or distributor to retail its range of vehicles. M&M had planned to launch the pick-up line first. It also has plans to launch an SUV version of the Scorpio by December next year. The company’s future plans also include launch of a four-door pick-up version of the Xylo.

Power stocks are trading weak with GVK Power and Infra and CESC Ltd leading the losses. NTPC signed an MOU with with Bangladesh Power Development Board (BPDB) to establish two thermal power projects at an estimated investment of Rs 132 bn. The Bangladesh power plants will have an aggregate capacity of 2,640 MW. They will be set up at port cities of Chittagong and Khulna. The plants will use imported coal as fuel. These plants are likely to be built as equal joint venture, but will be operated by NTPC. The Indian power major, will also train BPDB engineers and help improve efficiency of existing power stations.