Strong start to the decade's last day

Thu, 31 Dec 10:30 am

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The Indian markets have started on a strong note. The benchmark indices opened well above the breakeven mark and have managed to progress deeper into the positive territory since then. Asia is currently trading in the green with Hong Kong (up 1.6%) leading the pack of gainers. The US markets closed marginally higher yesterday.

Currently, in India, heavyweights from the BSE-Sensex are trading in the green with power and auto stocks leading the pack of gainers. The BSE-Sensex is trading higher by 137 points, while the NSE-Nifty is up by 37 points. Buying interest is also being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.8% and 1.1% respectively. The rupee is trading at 46.66 to the US dollar.

Auto stocks have opened the day on a positive note. Gainers here include Ashok Leyland and M&M. As per a leading business daily, M&M plans to launch a 1 tonne light commercial vehicle (LCV), Maxximo. It is built on a completely new platform and features a new engine. Production has already started at M&M’s Chakan facility and will be commercially available by mid-January. It may be noted that the 1 to 1.5 tonne LCV segment is witnessing keen interest from several companies including Tata Motors, Bajaj Auto, Ashok Leyland, Piaggio and Hindustan Motors. At Rs 240,000, Tata Motors’ 1 tonne Ace leads the market with a monthly sale of over 10,000 units. In fact, it has over 90% market share of the segment. Given that the 1 tonne LCV segment is likely to grow by 15% to 20% over the next few years, we believe it makes sense for M&M to launch Maxximo to fill the gap in its portfolio.

Power stocks have opened the day on a positive note. Gainers here include NTPC and Power Grid. As per a leading business daily, the government is set to allow NTPC to sell around 10% of the power it generates at market-determined prices. The decision is likely to come in the next three weeks. It may be noted that presently 85% capacity of NTPC is sold to state electricity boards via long-term power purchase agreements. The rates are fixed at around Rs 1.8 per unit and are lower than market-set prices of Rs 6 to Rs 9. The centre gives the remaining 15% capacity to power deficit states. It is out of this share that NTPC will carve out the 10%. In our view, this is a positive development as it will boost the company’s bottomline. Interestingly, it will also help the government garner better valuations for the 5% stake sale that it plans.