Going nowhere...

After opening on a weak note, the markets seem to have stabilised at those levels. While the index heavyweights are exerting significant downside pressure on the indices, selective buying in auto, banking and cementing stocks are negating this to some extent. However, most of the other sectors, especially energy, software and steel, are trading weak.

The BSE Sensex is trading at 6,438 (down 42 points) and the Nifty is trading at 2,012 (down 19 points). The rupee is trading at Rs 43.74 per US Dollar.

While the markets are trading rather weak, select buying is being witnessed in auto stocks with the gainers being Tata Motors (up 1%), Bajaj Auto (BJAT.BO, news) and Maruti (both up marginally). Amongst the losers are Hero Honda (HROH.BO, news) and Ashok Leyland (ASOK.BO, news) , both having lost about 1% each in the trading so far. The gains in the Tata Motors stock could be attributed to some kind of bottom fishing at lower levels as the stock has corrected nearly 20% over the last 2-3 months. However, it must be noted that after the strong growth rates in commercial vehicle sales of about 35% and 25% over the last couple of years, the company expects the growth rates to be relatively subdued at about 12% to 13% in the current fiscal with a downward bias. High crude oil prices and slow progress on the government's road development programme could further act as dampeners to the demand growth.

As per a leading business daily, Indian textile exports have fallen post quota regime. Textile exports for the month of January have fallen 7.6% YoY. This is rather discouraging as Chinese exports in the same period have been on the rise. The primary reason, for the fall in Indian textile exports, is seemingly the pressure on margins faced by exporters. As a result, they are unwilling to take export orders. Similarly there are also fears of impact of new duty neutarilsation schemes effective from May 2005. Though in the near-term, the story of Indian textile exports appears to be gloomy, in the long run, there are definite benefits that are to be reaped from the abolishment of the textiles quota regime. Most of the textile stocks have lost ground in the region of about 2%-3%.

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