Investors prefer largecaps over peers

Mon, 13 Sep 01:30 pm

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Persistent buying activity led the Indian markets to continue their upward movement during the previous two hours of trade. Currently, stocks from the banking, realty and oil & gas spaces are amongst the top gainers while those from the consumer durables and FMCG sectors are amongst the lowest gainers. The current market sentiment is very positive with the advance to decline ratio poised at 1.4 to 1 on the overall BSE.

The BSE-Sensex is currently trading higher by around 330 points (up 1.8%), while the NSE-Nifty is up by about 100 points (up 1.8%). Stocks from the small and midcap spaces are also in the green with the BSE-Midcap and BSE-Smallcap indices up by about 1% and 0.9% respectively. The rupee is trading at 46.33 to the US dollar.

IT stocks are currently trading firm led by NIIT Technologies, TCS, Infosys and NIIT. According to the management of IT major Wipro, clients are being cautious on their IT spends. In a recent interview with a leading business portal, the company’s management has indicated that customers’ IT budgets are in the flat to slightly higher range as they are looking for transformational projects. It added that clients in general are increasingly focusing on technology projects that would yield to long term changes in their operations. An example of the same is given as cloud computing. This is as against investing in process that is aimed at being more efficient. The company also added that the decision making process has also extended. However, on the bright side, the company is not seeing any delays or cancellations.

The management also shared its views on the activity pick up in China. It had earlier indicated that the business was slower than anticipated. However, the management is seeing an improvement in activity. While the company does not provide the revenues from China separately, the contribution from the world’s growing major economy is very less. During the quarter ended June 2010, the company earned nearly 57% of its revenues from the US and about 16% from Europe while India and Middle East contributed to about 9%. Sales from Japan and the rest of the world contributed to about 2% and 7% respectively.

Auto stocks are trading firm led by TVS Motor and Ashok Leyland. As per a leading business daily, Tata Motors is setting up subsidiaries in the overseas market. As per sources, the company wants to increase its presence and improve its focus on operations abroad. The new subsidiaries will target Latin America, South-East Asia and the CIS countries. The fully owned overseas units will be modeled on the lines of Jaguar Land Rover and apart from distribution to dealerships will be responsible for spare parts supply and after sales service. While Tata Motors is expected to formally announce the formation of its new subsidiaries in the next three months, this move is expected to help the company build a stronger image in key markets and also the organisational structure that MNC auto makers like GM and Ford follow.