Auto Stocks Make A Comeback

Even as the International Monetary Fund (IMF) reduced India’s growth forecast for FY20 by 90 basis points to 6.1 per cent from an estimated 7 per cent, Nifty and Sensex have been busy responding to the financial results announced by companies for the quarter ended September 30, 2019. With the festive season at the doorstep, the demand for commodities is expected to pick-up. The easing of the monetary policy and recent corporate tax cuts are expected to support the growth but with a lag. 

On the global front, NASDAQ, S&P 500 and the Dow Jones Industrial Average (DJIA) were up by 1.67 per cent, 1.61 per cent and 1.10 per cent respectively, after the announcement of strong US corporate results for Q2FY20. With October 31, 2019, which is the deadline for Brexit, inching closer, FTSE 100 is under pressure thus registering a fall of 0.66 per cent for the fortnight. 

Comparatively, CAC 40 and DAX have maintained a stable growth of 2.08 per cent and 4.43 per cent respectively. Despite reporting a poor data growth and a weak demand, East-Asian markets such as Nikkei and Shanghai were up by 5.23 per cent and 1.13 per cent respectively. Hang Seng recovered by 3.48 per cent as the frequency of violent protests in Hong Kong reduced significantly. 

Reliance Industries announced better than expected rise in profits on consolidated basis for its retail and telecom business. These consumer businesses contribute towards a third of the company’s operating profits, thus enticing positive vibes across the Indian business environment. For the fortnight, Nifty went up by 4.81 per cent and Sensex went up by 4.71 per cent. The small-cap index was up by 3.26 per cent with mid-cap index rising by 5.41 per cent. After a good monsoon season and decreased corporate tax rates, the beaten-down Auto sector has seen some revival in demand as it surged up by 8.62 per cent during the last few weeks. Following it, the Metal and Realty sectors were up by 8.25 per cent and 7.45 per cent respectively. The IT sector continued to underperform with an expansion of only 0.47 per cent. On the other hand, the Power and Bankex revived with a growth of 5.21 per cent and 4.83 per cent respectively. 

For the fortnight, the trading data for FIIs and DIIs showed that FIIs were net buyers to the tune of Rs. 7,917.58 crores, whereas, DIIs were net sellers to the tune of Rs. 3,816.82 crores. 

The gold price increased by 3.03 per cent to Rs. 39,565 for 10g of 24-carat gold, in the last 15 days, although it rose by only 0.59 per cent since the beginning of this month. As data indicated a slowdown in China, which is also the biggest importer of oil, Brent Crude prices fluctuated with a hike of 1.83 per cent in the last 15 days to US$59.42 per barrel and increased by 0.89 per cent since the beginning of the current month. Compared to its Asian peers, rupee underperformed ending marginally higher at 71.15 per dollar on October 18, 2019.