Realty, auto stocks weigh on markets

Thu, 20 Oct 01:30 pm

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The Indian stock market continued to trade weak on account of selling pressure in heavyweights during the last two hours of trade. All sectoral indices are trading in the red. Stocks from the realty, consumer durables, Auto, metal and banking are leading the pack of losers.

The BSE-Sensex is trading down by 302 points while NSE-Nifty is trading 95 points below yesterday's closing. The BSE Mid Cap and BSE Small Cap indices are trading down by 0.8% and 0.6% respectively. The rupee is trading at 49.65 to the US dollar.

Auto stocks have been trading mixed with Tata Motors, Escorts, Mahidnra and Mahindra (M&M) and Hero Motocorp leading the pack of losers. However, TVS Motors is trading in the geen. As per a leading financial daily, the ongoing several talks by Haryana government with the management and striking workers at Maruti Suzuki India's (MSI) Manesar plant could not produce any results so far. As a result, strikes at the plant have now entered into its 14th Day. And no prize for guessing why the other auto majors such as Tata Motors, General Motors and Volkswagen are putting all efforts to produce more cars. These days, festive season is going on which always propels the demands for cars. But due to the long agitation by the workers, Maruti could produce just 1,850 cars yesterday at its twin Gurgaon-Manesar plants, way below its normal average of over 4,000 cars. The company has already a huge order backlog.

All this has forced customers to look for other car manufacturing companies. Considering this lucrative opportunity in the market, Tata Motors has already ramped up production of diesel variants of Indica and Indigo cars. It is producing 20,000 units per month as compared to earlier production of 14,000 units per month.

Pharma stocks have been trading mixed as well with JB Chemicals, Glenmark Pharma and Torrent Pharma leading the pack of gainers. However, Orchid Chemicals and Natco Pharma are trading weak. As per a leading financial daily, Sun Pharmaceutical is going to face a big hurdle in its efforts to acquire the remaining stake in Israeli firm Taro Pharmaceuticals Industries. One of the shareholders of Taro Pharmaceuticals, Grand Slam Asset Management, has written to the Taro board that it is not satisfied with the bid price offered by Sun Pharmaceutical. According to Grand Slam Asset Management, on the basis of normal acquisitions valuation of US generic drug companies in the last six years, the share of Taro Pharmaceuticals should at least be valued at US$ 48.5 per share. This is almost double of what Sun Pharmaceutical is offering. The company has made an offer to acquire the rest 34% at $24.5 per share, which is 26% premium to the traded price of US$ 19.45 on Monday. According to industry experts, Sun Pharmaceutical would need to revive its offer if it wants to buy the rest of the holdings in Taro.