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Auto, bank stocks drag the markets
Thu, 9 Dec 09:30 am

Asian markets have opened today on a positive note. Japan is leading the pack of gainers on the back of ‘better than expected’ economic growth numbers released there. However, Chinese stocks have opened in the red. As for the Indian markets, these have also opened on a weak note. Autos and banks are the biggest losers currently.

The BSE-Sensex is trading lower by around 35 points (0.2%), while the NSE-Nifty is down by about 15 points (0.3%). Mid and small cap stocks are trading in the negative as well, with the BSE-Midcap and BSE-Smallcap indices down by 0.1% and 0.3% respectively. The rupee is trading at 45.01 to the US dollar.

Hero Honda has stated that it has hiked prices of its models. The price increase is in the range of Rs 500 to Rs 1,500 depending on the model. The hike is mainly to counter the effect of rising input costs. Interestingly, the price hike is lowest in the entry level segments and highest in the premium segments. The management has stated that the pricing decision is based on a long term view. The company has been facing a pressure on margins in the recent times. A leading daily had earlier reported that there are chances of a hike in the royalty payments made to Honda by the company. If this were to go through, it would impact Hero Honda’s margins negatively. The price hike may help to offset the impact to some extent. The stock is currently trading in the green along with Mahindra & Mahindra. However, Tata Motors and Maruti Suzuki are witnessing selling pressure.

Telecom stocks have opened in the red. Reliance Communications is the biggest loser. The telecom regulator TRAI has unveiled an ambitious plan for the broadband market. The regulator aims to have nearly 75 m broadband subscribers by 2012 and to double the number by 2014. India currently has about 10 m broadband subscribers. The ambitious target is based on the expected demand from BWA (broadband wireless access) that is expected to account for nearly half of the broadband demand. India has lagged behind its Asian counterparts like China in terms of broadband penetration. However, with BWA as well as fiber optic cable, the demand is expected to pick up pace going forward.

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