It tanks again!

Markets continue to lack in direction as is evident from a narrow movement with lack of adequate volumes. Possibly, investors have taken a 'wait and watch' approach in light of the earnings seasons, which begins next week. While select auto and banking stocks are finding buyers, auto sector is a mixed bag.

The BSE Sensex is trading at 6,596 (down 10 points) and the Nifty is trading at 2,065 (down 4 points). The rupee is trading at Rs 43.73 per US Dollar.

Some of the major gainers in the BSE 'A' group are Adani, Ingersoll (INGR.BO, news) Rand, Chennai Petro, Arvind Mills (ARMI.BO, news) , Colgate (COLGd.BO, news) and Kochi Refineries are up. After losing ground, standalone refineries have gained some ground. Fears of decline in petroleum prices initially were expected to have a negative impact on gross refining margins. However, off late, product prices have recovered in light of higher crude prices in the global markets and disruption in production in the US in light of fire in the manufacturing facility of BP. However, sustainability is still under cloud.

Tata Motors has gained 3%. The stock had lost significantly in the last two months. As against a CAGR of around 30% in commercial vehicle sales in the last three years, we expect CV sales to grow at a much slower rate going forward. This is because of the rise in petroleum prices. Since this accounts for as much as 50% of total costs of transport operators, demand may suffer. Besides, much also depends on the monsoon next year, which is not predictable. While the company's performance on the car segment is encouraging, the fact that the market is getting increasingly competitive will limit margins.

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