After languishing in the red for most of the session today, the benchmark indices inched closer to the dotted line during the closing hour of trade. The BSE Sensex ended merely 4 points above yesterday’s closing level whereas the NSE Nifty edged lower by 4 points. Mid and small caps, however, managed to stay in the positive with respective indices up 0.3% and 0.1% respectively. The rupee is trading at 46.82 to the US dollar.
Auto stocks are trading mixed with Tata Motors (NYSE:TTM) leading the pack of gainers. TVS Motors and Exide were however at the receiving end. Mahindra and Mahindra (M&M) has been declared as the preferred buyer for South Korean Ssangyong Motors. Three business groups including Indian companies Mahindra and Ruia Group and South Korea's Young An submitted proposals to buy the cash-strapped auto company. M&M has been chosen after having made the highest bid and having financial plans secured. According to a leading business daily, Mahindra was willing to pay up to US$ 400 m to acquire a majority stake in Ssangyong. The Indian manufacturer intends to become a major global utility vehicle maker. This deal will help M&M quickly build a worldwide footprint as the Korean company exports to Russia, Europe, China, and the Middle East. The company may also help M&M to develop technology and add to its vehicle line up
If completed, this deal will mark a third change of main shareholder for Ssangyong. The now defunct Daewoo group took over the company in 1998 and Ssangyong was sold in 2004 to China's top automaker SAIC Motor Corp. However, both acquirers failed to grow the company to challenge Korean market leader Hyundai (OTC:HYMLF). The Korean company has about 2% of the Korean auto market, but its sales increased three fold in the first seven months of 2010 to 43,811 vehicles.
In another news from the sector, Ashok Leyland has secured an order for 1,000 buses from the People's Leasing Company in Sri Lanka. This order is worth US$ 26 m and represents the company’s largest single order for buses from Sri Lanka. The delivery of these buses will commence immediately and will be completed before March 2011. Ashok Leyland is a leader in the Sri Lankan bus market with sales of more than 8,000 over the past 6-7 years. It must be noted that the company did very well in the recently concluded June 2010 quarter result season. Sales grew by 156% YoY during the quarter. Out of this, the medium and heavy commercial vehicles segment (M&HCV) saw a growth of 189% YoY.
Pharma stocks closed mixed today. While Biocon, Dr.Reddy’s (NYSE:RDY) and Ranbaxy (OTC:RBXLF) found favor, Lupin and Glenmark closed in the red. As per a leading business daily, Atul Sobti who had taken over as the MD of Ranbaxy when Malvinder Singh put in his papers, is also likely to step down from his post. Malvinder Singh had resigned in May 2009 before his five year term. Mr Sobti, the COO at the time, was immediately appointed the CEO and MD of the company with a three year term expiring in May 2012. It must be noted that Ranbaxy in the past few years has run into trouble with the US FDA as 2 of its manufacturing plants at Poanta Sahib and Dewas failed to adhere to the quality manufacturing standards of the US regulator. This has considerably impacted Ranbaxy’s sales from the US market, and has put a question mark on the likely launches in the US market in the future given that the matter has still not been entirely resolved.