Indian Markets Tuesday Wrap-Up: Late-Day Recovery

Buying at lower levels during the second half of today’s trading session led the markets to recover their losses and end the day on a flat note. The BSE-Sensex ended higher by around 30 points, while the NSE-Nifty closed lower by about 5 points. Stocks from the mid-cap and small-cap spaces ended the day on a positive note, recording gains of 0.8% and 0.9% respectively. Buying activity was witnessed in stocks from the metal, consumer durables and automobile spaces, while stocks from realty and power space led the pack of losers.

Other Asian markets ended the day on a mixed note. The European indices are currently trading mixed as well. Rupee was trading at 47.1 against the US dollar at the time of writing.

Two-wheeler stocks ended the day on a firm note led by Bajaj Auto and Hero Honda. Two-wheeler major, Bajaj Auto announced its sales volumes for the month of May 2009. The company reported an 8% YoY drop in overall motorcycle volumes as compared to the same period last year. In fact Bajaj Auto’s exports, which grew by nearly 25% YoY for FY09, witnessed a 3% YoY drop in volumes during the month of May. The overall decline in volumes is a surprising development if one compares it to Hero Honda’s 22% YoY growth in volumes for the month of May. A reason for such disparity may be due to the former’s focus on the already saturated urban areas.

Telecom stocks ended the day on a weak note led by Idea and Bharti Airtel. As per data released by the TRAI, the number of mobile subscribers in India crossed the 400 m mark during the month of April 2009. During the month, there were nearly 11.9 m additions. However, this figure is lower than the previous month’s figure of 15.6 m. While this may indicate a slowdown in mobile subscriber additions, it may be noted that March, being the last month of the fiscal, the telecom operators tend to become a bit aggressive on their marketing activities. In addition, the additions also seem to have slowed down on account of withdrawal of special plans and deals. As such, on whether the Indian telecom market is facing a slowdown can be actually witnessed in the coming months. It may be noted that the department of telecom has set a target of 500 m subscribers by 2010.

Improved production levels have raised India’s infrastructure sector output by 4.3% YoY for the month of April as compared to the same month last year. Growth in production levels in core sectors such as cement, finished steel, coal and electricity, was 2.7% in the same month last year and 5.9% in the year before. However, crude oil production remained in the negative as it fell by 3.1% YoY. Last year it recorded a growth of 1%. It may be noted that the infrastructure sector accounts for nearly 27% of India's industrial output.