Indian Markets Drift Lower

Thu, 5 Nov 11:30 am

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After opening the day on a weak note, Indian stock markets continued to witness selling pressure. Among the sectoral indices, pharmaceutical, banking and banking stocks are witnessing the highest selling pressure.

BSE-Sensex is down 72 points (0.3%) and NSE-Nifty is trading 28 points down (0.3%). The S&P BSE Midcap & the S&P BSE Smallcap indices are also trading in the red, down by 0.5% and 0.6% respectively. The rupee is trading at 65.65 to the US$.

Banking stocks are trading on a discouraging note with Bank of Maharashtra and Dena Bank bearing the maximum brunt. As per a leading financial daily, the government has hired SBI Capital Markets to draw up plans for the sale of a strategic stake in IDBI Bank. It is also exploring new options for the stake reduction including merger with a non-state lender and preferential allotments to institutions of sound financial standing.

The government currently owns 76.5% of IDBI Bank and it is looking to lower the same to 49%. This will be the first such exercise in the public sector banking space. The move is looked as a test case for the Modi government given that the law restricts government from reducing shareholding in other public sector banks to under 51%. Earlier this week, Jaitley had said the government is open to diluting its stake in public sector banks to 52%.

While no decision has been taken yet, sources said that the easiest way to deal with the reduction in stake is to sell shares in small lots to the public through the stock exchange route. However, this mode will be time consuming and may not be able to realize the best value for government. The Union Cabinet will take a final call on the issue.

Scrip of IDBI Bank is trading down by 1.8% on the BSE.

Stocks in the automobile space are trading on a mixed note with Ashok Leyland and Maharashtra Scooters leading the losses. Ashok Leyland has reported its results for the second quarter ended September 30, 2015.

The company has posted a robust 137% rise in its net profit at Rs 2.8 billion for the quarter on a YoY basis. Total income increased by 53% YoY to Rs 49 billion during the quarter.

During the month of October, the company's overall sales grew by 17% on a YoY basis. Medium and heavy commercial vehicles (M&HCV) sales were up by 22% YoY to 7,177 units during the month. Light commercial vehicles (LCV) sales were up by 4% YoY. Further, during April to October 2015, total sales rose by 40% YoY.

On a separate note, the company has recently sold eighteen lakh equity shares of Rs 10 each held in IndusInd Bank Limited. It was sold in the open market during September 25-29, 2015 at a net price of Rs 918.76 per share.

Ashok Leyland the Hinduja Group flagship company in India, is engaged in the manufacturing of commercial vehicles and related components. The company's products include buses, trucks, engines, defense and special vehicles.

Presently the stock of Ashok Leyland is trading down by about 4.5%.