Sensex up over 200 points; Nifty eyes 7,800 mark

Auto stocks are trading mixed post the Supreme Court ruling that banned the registration of luxury diesel cars in Delhi till March 31, 2016

Markets continued to hold firm in noon deals with the Nifty 50 trading above the 7,750 levels with a gain of around 57 points, while the S&P BSE Sensex moving up 204 points to 25,524 levels. 

The rise is in line with most Asian markets that have gained ground ahead of the US Federal Reserve meeting outcome that seeks to raise key rates for the first time in nearly a decade. Nikkei, Straits Times, Hang Seng, Taiwan Weighted, KOSPI and the Shanghai Composite moved up 0.1% - 2.6%.

"Our US economists expect the US Fed to raise rates by 25 bps (basis points) on Wednesday night. We doubt if it will be able to satisfy expectations for a dovish hike, however. The dot plot should imply 4 hikes in 2016 and perhaps also in 2017 (vs 5 now), with the terminal rate trimmed to 3.25%. In contrast, the market has priced in just over 2 rate hikes next year and a much lower terminal rate," points out Indranil Sen Gupta, India economist at Bank of America-Merrill Lynch in a recent report.

 

Back home, the broader markets are also trading firm with the S&P BSE Mid-cap index and the S&P BSE Small-cap index gaining 0.9% and 0.8%, respectively till 12 noon.

Key indices

Index	LATEST	CHG	CHG
		(PTS)	(%)
	1332.26	35.01	2.7
	9272.74	211.15	2.33
	1485.34	32.79	2.26
	1304.02	28.18	2.21
	158.9	3	1.92
	1243.71	23.33	1.91
	1854.21	34.19	1.88
	6609.18	108.72	1.67
	3357.63	51.21	1.55
	5940.65	89.47	1.53
	18968.3	278.71	1.49
Data as at 12:30pm

Bharti Airtel, Gail India, ONGC, ICICI Bank and NTPC are among the top gainers among the S&P BSE Sensex stocks, rallying 1.3% - 3.8%. On the other hand, Mahindra & Mahindra (M&M), ITC, Wipro, Hindustan Unilever and Coal India are among the key losers.

M&M tumbles post SC order

Auto stocks, however, were trading mixed in noon deals post the Supreme Court ruling that banned the registration of luxury diesel cars in Delhi till March 31, 2016. Eicher Motors, Ashok Leyland, Tata Motors, Maruti Suzuki India, Hero MotoCorp and Bajaj Auto were trading higher by up to 2% on the BSE. 

On the other hand, Mahindra & Mahindra (M&M) slipped 4.5% to Rs 1,231 on the BSE. Analysts say that the decision is likely to have a negative impact on M&M as about 95% of its passenger vehicle portfolio is above the 2,000 cc range.

M&M's product portfolio
Products	Engine (CC)	FY15 Volumes	% of Total
Bolero	2500	100,553	48.6
Scorpio	2200/2500	51,553	24.9
XUV500	2200	34,418	16.6
Thar	2500	8,868	4.3
Xylo	2200/2500	8,472	4.1
Aggregate			98.6
Source: Religare

"We believe the news is likely to have negative impact on M&M as about 95% of its passenger vehicle portfolio is above the 2,000 cc range. The news would not have much impact on Maruti Suzuki (it hardly has any product above the 2,000 cc segment) and Tata Motors (Tata Motors earnings are driven largely by JLR which is a global player)," said Bharat Gianani, senior research analyst (automobiles), Angel Broking.

"We think the auto industry is likely to have negotiations/dialogue with the Government and provide a permanent solution which could be banning of the older vehicles (which have more population and are relatively more polluting) or further improving the emission for new vehicles which could then possibly result into the ban not extending beyond March 31, 2016. Further, Delhi contributes about 7% of the overall passenger vehicle sales and the contribution of diesel vehicles is about 2-3% of the overall industry volumes which would further limit the impact of the ban," he adds.