Indian Markets Trade weak

Wed, 28 Oct 01:30 pm

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After trading in the negative zone during the morning session, the Indian Indices continued to trade weak. Sectoral indices are trading on a mixed note with stocks from the banking and healthcare sectors bearing the maximum burnt. However, consumer durables stocks are trading positively.

The BSE-Sensex is trading down by 151 (down 0.6%) and the NSE-Nifty is trading down by 40 points (down 0.5%). The S&P BSE Midcap index is trading marginally down while the S&P BSE Smallcap index is trading up by 0.4%. Gold prices, per 10 grams, are trading at Rs 27,000 levels. Silver price, per kilogram, is trading at Rs 37,199 levels. Crude oil is trading at Rs 2,832 per barrel. The rupee is trading at 65.08 to the US$.

As per a leading financial daily, Maruti Suzuki India (MSI) will start paying royalty to its parent Suzuki in rupee instead of yen for all new models starting with a compact SUV to be launched early next year.

The move, which is aimed at insulating the company from foreign exchange fluctuations, is likely to result in an average royalty rate of 5% of net sales as compared to 5.6-6% for the existing models which are paid in yen.

The company said that the rates for specific models will vary depending on contribution from Maruti in the development of products. As per the decision, the higher the contribution, the lesser will be the rate.

On a separate note, with all approvals in place, MSI is going to ask minority shareholders to vote on a proposal to allow its parent Suzuki Motor Corporation (SMC) to invest in and own a new manufacturing facility in Gujarat. Voting for the same will commence on November 16 and the results will be announced on December 17. The company has also been ramping up its R&D centre in Manesar in order to play a bigger role in product development done in collaboration with Suzuki.

The company recently reported its results for the quarter ended September 2015. The revenues of the company grew by 13.2% on a YoY basis. The sales of passenger vehicle grew by 9.8% YoY to 3,53,000 units during the September quarter. Reportedly, company's growth in the rural areas was higher as compared to the urban areas. This comes as a surprise as various automobile players are struggling in the rural areas. The company's sales in the rural areas grew by 10% as against 4% in the rest of the country.

Presently, the stock of Maruti Suzuki is trading up by 1.3%.

Energy stocks are trading on a mixed note with Chennai Petroleum leading the gains and Cairn India leading the losses. According to an economic daily, Oil and Natural Gas Corporation (ONGC) is expected to increase its upstream capital expenditure by 10% next year and intensify its exploration activities. This is aimed to take advantage of the current depressed global energy market.

With rig rates trading down by 30-40% on the year and other exploration services rates down by 40-50%, the company is finding it gainful to ramp up its activities by securing as many rigs as possible in the depressed environment.

With the decision, the company will be increasing its 2016 capital expenditure to about Rs 360 billion.

The company's trailing 12-month (TTM) EPS stood at Rs 21.52 per share as per the quarter ended June 2015. The stock's price-to-earnings (P/E) ratio was 11.38. The latest book value of the company is Rs 169.02 per share. Scrip of the company is trading down by 1.2%.