Broad based buying aids indices

Mon, 20 Sep 11:30 am

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After starting today’s session on a positive note, Indian indices have gained further ground during the last two hours of trade. Other key Asian markets too are trading strong with both Nikkei and Hang Seng registering healthy gains. Currently, heavyweights in the Sensex are in the green with stocks from FMCG and realty space witnessing strong buying activity.

The BSE-Sensex is trading up by around 166 points, while the NSE-Nifty is up by about 51 points. Strong buying interest is also witnessed amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading up by 0.6% and 0.9% respectively. The rupee is trading at 45.66 to the US dollar.

Auto stocks are trading mixed with Hero Honda and Tata Motors leading the gains. However, TVS Motors and Eicher Motors are trading in the red. As per leading news daily, four firms namely KKR & Co, TPG Capital, Carlyle Group and Bain Capital LLC are competing to acquire Honda Motor’s stake in Hero Honda. It should be noted that Honda Motors own 26% in Hero Honda. Two of the firms are planning to buy 15% in Hero Honda while another 5% will be sold to the Munjal family. However, as per earlier reports, Munjal family was likely to purchase the entire 26% stake from Honda Motors through an SPV incorporated in Singapore. As of now, there is not much clarity as to how the stake sale exercise would shape up. Over the years, Hero Group and Honda Motors have had a successful partnership utilizing Honda's technology and Hero's strength in sales. However, once Honda Motors set up its wholly owned subsidiary in India in 2001, talks have surfaced about the change in Hero Honda’s equity structure.

Telecom stocks are trading positive with RCom and Bharti Airtel leading the gains. Bharti recently announced its entry into the rapidly growing mobile handset business. This is a part of collaboration with group firm Beetel. It plans on launching eight handsets in the Rs 1,750-7,000 price range. This will be the first major entry into the mobile handset market by a major domestic player. The market is dominated by major global players including Nokia, Samsung, Sony Ericsson, Motorola, RIM, Apple etc. Beetel is one of the largest manufacturers of landline phones. According to the company, the market for handsets in the Rs 2,000 -6,000 range is witnessing 30% growth. India is one of the fastest growing markets in the world for mobile handsets with annual shipments of about 130 m mobile devices. Beetel may not market handsets with Bharti exclusively, but might tie up with other providers as well.

To start with, Beetel will have an in-house design facility in India and will operate on a business model under which manufacturing will be done abroad, but with innovation done in India. The entire range of Beetel phones will include features like dual SIMs, FM and cameras. It will also offer a bouquet of VAS (value added services) features to appeal to the youth, ranging from popular social networking applications (Facebook and Nimbuzz), partnering with Mobile commerce partners (NgPay), mobile portals (Yahoo), Internet browser (Opera Mini), offers of free call and free SMSes powered by Ibibo. In the initial phase of the launch, the phones will be available through a nationwide distribution network of over 4,000 outlets across Delhi, Haryana, UP and Uttaranchal, Rajasthan, Punjab and the seven northeastern states