Energy, IT stocks lead the decline

Mon, 5 Sep Closing

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While the markets came off the day's lows during the closing hours, they were unable to move into the positive and as a consequence, indices in the Indian stock market closed the first day of the week on a negative note. The BSE-Sensex edged lower by around 110 points whereas NSE-Nifty was seen shedding close to 20 points (down 0.45%). The BSE Mid Cap and BSE Small Cap indices bucked the trend though and closed marginally higher today. Two stocks declined for every one that gained on the Sensex today.

While most Asian indices also closed in the red today, Europe too is witnessing a negative trend currently. The rupee was seen trading at Rs 45.95 to the dollar at the time of writing.

By closing in the negative today, the markets broke last week's winning streak whereby the Sensex went up to the tune of 6%. The indices traded weak right from the beginning today and did not cross the breakeven point even once. The reason the markets fell today could be find out from the fate of export oriented stocks. With the same suffering significant reverses, it could be argued that economic growth in the West has once again come under question. With the US economy failing to add any new jobs in August, recession worries came to the fore yet again and this led investors to dump Indian stocks that get a good part of their revenues from abroad. All eyes are now on the speech by US President Obama scheduled this Thursday where he is expected to unveil a new fiscal plan.

Two wheeler stocks like Hero Motocorp, Bajaj Auto and TVS Motor defied the overall market trend and closed strong today. In fact, Bajaj Auto, India's second largest two-wheeler player closed at its life time high. The buoyancy in the two-wheeler counters could be attributed to the continued strong growth in sales despite an adverse interest rate environment. Furthermore, the fact that commodity prices have trended down in recent times is also likely to be a big positive for these players. It should be noted that despite growing strongly, two wheeler penetration in India is on the lower side and hence, demand should continue to remain strong for few more years to come. Also, the fact that companies like Bajaj Auto and TVS Motor have been successful in making their mark in the exports markets is also adding to the allure towards sector stocks.

As per a leading daily, Tata Steel, India's largest steel manufacturer is likely to set up a new steel tubes manufacturing and processing facility at its Zwijndrecht plant in the Netherlands to cater to the automotive sector. The supply of specialised chassis parts, normalised, cut to length high strength steel tubes for lightweight structural use in vehicles will be the main targets of this facility. This investment will make the company a fully integrated tubes supplier for the auto sector, in control of the complete value chain, right from steel production to production, normalising, cutting and packing of tubes. The stock closed higher on the bourses today along with Steel Authority of India Steel Authority of India (SAIL) and Jindal Steel.