The Fed push!

Carrying on from what was seen in yesterday's trades, the Indian markets have opened today on a strong note. Today's strength seems possibly on the back of positive vibes emanating from the US Fed with regards to interest rates and inflation. Buying is being witnessed in key stocks from across sectors.

The BSE Sensex is trading at 6,512 (up 47 points) and the Nifty is trading at 2,038 (down 13 points). The rupee is trading at Rs 43.73 per US Dollar.

Auto stocks have opened today on a mixed note and major gainers here include Ashok Leyland (ASOK.BO, news) (2%), Maruti (1%) and Tata Motors (1%). On the other hand, 2-wheeler stocks, Bajaj Auto (BJAT.BO, news) and Hero Honda (HROH.BO, news) (both 1% down) are leading the losers' pack. Selling in Hero Honda seems a fallout of the mixed http://www.equitymaster.com/detail.asp?date=4/12/2005&story=4 FY05 results announced by the company late yesterday. For the fourth quarter of FY05, while revenues are up 16% YoY, profits have dipped 2%, mainly due to the effect of higher input costs. For FY05, topline and bottomline have grown by 27% and 11% respectively. With prices of inputs like steel, rubber, plastics etc. on the rise, operating margins and hence the net profits of the company have been adversely affected. The situation is further aggravated due to the company's inability to raise prices on account of fierce competition. Though raw material prices have weakened from their highs, we expect margins to remain under pressure at least in the near future.

Toned down inflation worries from the Federal Reserve led to the US markets gain in yesterday's trades. While the Dow closed with 0.6% gains, the NASDAQ closed 0.7% up. In the minutes released of the February 22 meeting of the Fed, the central bank has indicated that while the underlying inflation has moved up modestly, it would be relatively lower going forward. Also, it has acknowledged that while interest rates may need to increase further, there was no need to start hiking rates faster now. This seemed to have perked up sentiments on the US bourses. As far as the Asian indices are concerned, they are trading mixed.

Email this article to your friend -  View most popular