Mumbai: Shares turned positive on Monday afternoon, as a steep rise in Hero Honda overshadowed the otherwise weak market sentiment.
At 12:19pm, the 30-share BSE index was up 0.02% at 19,868.10 points, with 13 components of 30 advancing. It had fallen as much as 0.8 percent earlier.
Top motorcycle maker Hero Honda bucked the trend and soared more than 12% after concerns over a likely hike in royalty rates were allayed. The 50-share NSE index was down 0.04% at 5,946.05.
Shares dropped 0.5% earlier taking their cue from weak Asian peers, but Hero Honda Motors bucked the trend and soared after concerns over a likely hike in royalty rates were allayed. Banks led the losses.
Bank of America-Merrill Lynch raised its rating on India’s biggest motorcycle maker to buy from neutral, after the recent underperformance of the stock and as worries over the financial impact from Honda’s exit from their India joint venture eased.
After market hours on Thursday, Hero Honda chief executive Pawan Munjal said Hero’s royalty payment to Honda would start declining from next year.
In its first reaction to the news, the stocks soared on Monday as much as 11.4%. Indian markets were shut on Friday for a public holiday.
By 10: 49am, on Monday, the 30-share BSE index was down 0.51% at 19,763.42. The 50-share NSE index was down 0.4% at 5,923.65.
“It is the typical year-end low activity. There is a lack of interest which is seen across the region,” said Vaibhav Sanghavi, director of Ambit Capital, referring to weak Asian stocks.
The MSCI’s measure of Asian markets other than Japan fell 0.8% and Japan’s Nikkei dropped by a similar amount.
Benchmark index is up 13.2% in 2010, driven by foreign fund investment of $28.4 billion. The banking-sector index was down 0.9%, as traders locked in gains. It is still up 28% in 2010.
Leading lenders State Bank of India , ICICI Bank and HDFC Bank declined between 0.5% and 1.6%.
In the broader market, gainers led losers in a ratio of 1.7:1 in a volume of 82 million shares.
Tata Chemicals was up 0.9% at Rs 374.30 after it said its British unit, Brunner Mond, had signed a binding agreement to acquire British Salt Ltd for 93 million pounds.
Drug firm Claris Lifesciences listed at Rs 224.4, down 1.6% from its issue price of Rs 228 a share. The stock extended losses and was trading at Rs 210.90.