Maruti up on strong November sales

Tue, 1 Dec 12:30 pm

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The Indian markets continued to trade in the green as buying activity sustained during the previous two hours of trade. The overall market sentiments seem to be optimistic as the advance to decline ratio is poised at 2.6 to 1 on the BSE. Barring stocks from the FMCG and IT space, buying activity is being witnessed in stocks across sectors. Realty, pharmaceutical and metal stocks are currently leading the pack of gainers.

The BSE-Sensex is trading positive, up by around 140 points or 0.7%, while the NSE-Nifty is up by about 45 points or 0.9%. The BSE-Midcap and BSE-Smallcap are also trading firm, up by around 1.2% and 1.8% respectively. The rupee is trading at 46.49 to the dollar.

Auto stocks are currently trading firm led by Bajaj Auto, Tata Motors and Maruti Suzuki. Gains in Maruti Suzuki are on the back of the company reporting its highest ever monthly sales during the month of November 2009. The auto major sold a little above 87,800 vehicles, of which export constituted of nearly 11,500 units. Domestic sales during the same month last year stood at over 47,700 units, representing a 60% YoY increase in volumes (domestic sales). Barring sales of its MUV models (Grand Vitara and Gypsy), the company recorded a year on year increase in all models. In percentage terms, the largest increase was in the C segment (Omni, Versa), which recorded a 116% YoY increase in unit sales. This strong increase in sales could be presumably on the back of increased demand for taxis.

Banking stocks are currently trading firm led by Axis Bank, ING Vysya Bank and Kotak Bank. In an interaction with a leading business daily, the management of Yes Bank has shared its medium term goal. As outlined earlier, the bank plans to fast track its foray into the retail credit segment. As per the business daily, it plans to launch credit cards, and also give out education and personal loans over the next 3 yrs. It may be noted that currently the retail portion of the bank comprises of just 1% of the total business. Retail broking and mutual funds are the other areas on the radar.

In fact, the management has set out an ambitious target for itself. It is looking at a five-fold increase in its balance sheet size to Rs 1.5 trillion and becoming a mid-size bank by 2015. However, the management also added that it would not lose focus of its core business, which is the corporate business. The retail foray will enable the bank to acquire low cost funds through the increase of CASA (current account and saving account portion) and the higher yields would indirectly help it improve its net interest margins (NIMs). As per the management, the target is to increase CASA deposits to about 25% from the current level of 9%. However, at the same time, one should not discount the risks associated with retail banking, which come in the form of delayed and deferred payments, which could impact any bank by way of rising NPAs.