India: Bargain Buying Continues On BSE and NSE

by: Equitymaster

Markets continued their northward journey on account of persistent buying in the index heavyweights. While stocks from the banking, consumer durables and consumer goods sectors are garnering investors' interest, stocks from the FMCG and pharma sectors are at the receiving end. The advance to decline ratio is poised at 1.5 to 1 on the BSE.

The BSE Sensex and NSE Nifty are trading higher currently, up by almost 630 points and 180 points respectively. The BSE Midcap and Smallcap indices are trading higher by 3.25% and 2.75% respectively. The rupee is trading at 48.20 to the dollar.

Auto stock are trading firm led by Bajaj Auto (up 8%), Escorts and M&M (each up 7%). As per a leading business daily, Tata Motors is planning to roll out a 0.5 tonne payload version vehicle for light three-wheeler goods carrier segment. The total three-wheeler market is around 0.35 m to 0.4 m units a year.

At present Bajaj Auto has the largest market share in the three wheelers segment (57% in FY08 and 12% of total units sold). The launch of the new version by Tata Motors will help the company to de-risk overall revenues. This move will also help the company in improving its margins as the three-wheeler market provides higher margins than those of the two-wheeler or four-wheeler segments. The stock of Tata Motors is trading higher by 4%.

Media stocks are currently trading mixed. While TV Today Network (up 10%) and NDTV (up 7%) are leading the pack of gainers, Zee Entertainments (down 2%) and Prime Focus (down 6%) are amongst the losers. As per a leading business daily, Zee Entertainment has launched its new regional channel in Tamil - Zee Tamizh.

This is Zee Network's 33d channel and third in the South, after Telugu and Kannada. It will be a complete entertainment channel. The company has invested around Rs 1 bn in this venture and is expected to break even in three years. This launch will give Zee an opportunity to make further inroads into one of the biggest markets that accounts for 8% (around Rs 6.9 bn) of the national advertising market.