Sensex Trades in Green as Automobile Stocks Rally; HCL Tech Dips 6% Post Q3 Results

Mon, 17 Jan 10:30 am

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Asian stock markets are trading on a mixed note today ahead of data expected to underline China's economic slowdown, as traders weighed policy easing by the nation's central bank.

The Hang Seng is down 0.7%, while the Shanghai Composite is trading up by 0.6%. The Nikkei is trading higher by 0.8%.

In US stock markets, Wall Street ended on a mixed note on Friday after sentiment appeared to sour on heightened anticipation for higher interest rates and concerns over the economic outlook.

New York Fed President John Williams, a key ally of Fed Chairman Jerome Powell, said that he expects economic growth to slow in 2022 to a 3.5% annual rate, from an estimated 5.5% rate last year, on the spread of omicron.

The Dow closed lower with a big drag from financial stocks as investors were disappointed by fourth quarter results from big US banks, which cast a shadow over the earnings season kick-off.

The Dow Jones Industrial Average fell 202 points, or 0.6%, while the Nasdaq Composite added 87 points.

Back home, Indian share markets are trading on a flat note.

Market participants will track shares of UltraTech Cement, HFCL, Sonata Software, and Nazara Technologies, as these companies will announce their December quarter results today.

HDFC Bank and HCL Technologies may also be in focus as the companies announced their Q3 results over the weekend.

The BSE Sensex is trading up by 62 points. Meanwhile, the NSE Nifty is trading higher by 21 points.

Maruti Suzuki and SBI are among the top gainers today. HCL Tech, on the other hand, is among the top losers today.

The BSE Mid Cap index is up 0.2% while the BSE Small Cap index is trading higher by 0.4%.

Sectoral indices are trading mixed with stocks in the automobile sector and energy sector witnessing buying interest.

Metal stocks and healthcare stocks, on the other hand, are trading in red.

Auto stocks are eyed as according to a new Delhi government mandate, aggregators and delivery services would have to ensure that 10% of all new two-wheelers and 5% of all new four-wheelers are electric vehicles in the next three months.

Shares of Thermax and L&T hit their 52-week highs today.

The rupee is trading at 74.16 against the US$.

Gold prices are trading up by 0.1% at Rs 47,832 per 10 grams.

Meanwhile, silver prices are trading up by 0.3% at Rs 61,792 per kg.

Crude oil prices rose today, with Brent crude futures at their highest in more than three years, as investors bet supply will remain tight amid restrained output by major producers with global demand unperturbed by the Omicron coronavirus variant.

Speaking of stock markets, India's #1 trader Vijay Bhambwani discusses why it's the right time to start investing in energy stocks, in his latest video for Fast Profits Daily.

As per Vijay, the charts are indicating that energy stocks are all set to take off.

Tune in to the below video to find out more:

In news from the electric vehicle (EV) space, Tata Motors is taking an early lead in the EV race with a plan to produce 50,000 EVs in the next fiscal year starting April.

The company has sounded out vendors on an assured production plan of 50,000 EVs in fiscal 2023 and scale it up to 125,000-150,000 units annually in the following two years.

If it is able to deliver on the targets, the EV business could potentially generate revenue of Rs 50 bn for Tata Motors in fiscal 2023 itself, justifying the steep valuation at which it sold a stake in the EV business to the PE fund.

With bookings for 15,000 vehicles and plans of launching three affordable electric cars in the sub-Rs 10 lakh range in the coming 12-18 months, Tata Motors is confident of scaling upon its early advantage.

Shailesh Chandra, MD, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility' said the company will keep expanding into new cities and by adding products to increase accessibility.

Tata Motors chairman had announced plans of launching 10 EVs by fiscal 2026. Meanwhile, passenger vehicle market leaders Maruti Suzuki and Hyundai Motor India aren't expected to launch mainstream EVs in India before 2024-25.

Tata Motors has an advantage here as it would not receive intense competition. The share of electric vehicles in Tata Motors' total passenger vehicle volume was 0.2% in fiscal 2020, which has risen to 5.6% in December 2021. At 50,000 units in fiscal 2023, this could top 12% of its total targeted volumes.

The auto major sold 350 EVs in 2019, which increased to 1,300 the following fiscal year and to 4,200 in fiscal 2021. Its EV volume in the ongoing fiscal is expected to be 17,000-18,000 units. In the first nine months till December 2021, Tata Motors has already sold around 10,000 EVs.

To know more about the company, check out Tata Motors' 2020-21 annual report analysis.

Speaking of EVs, have a look at the chart below which shows the massive opportunity in the two-wheeler EVs.

Here's what lead Smallcap Analyst at Equitymaster, Richa Agarwal wrote about this in a recent edition of Profit Hunter:

• In the last five years, two-wheeler sales in India were around 2 crore units per year. Now the sector is cyclical and has been in the downturn for some time. So let's consider a moderate 5% growth for the next 10 years.
  
  By 2030, we are looking at 2-wheeler sales of 3 crore units. Even if one third of this is EV sales, that's 1 crore electric 2-wheelers per year.
  
  In the last 2 years, average electric 2-wheeler sales were 1.5 lakh units. From 1.5 lakh to 1 crore, that's a 66x opportunity in 2-wheeler EVs.
  
  This is an annual growth rate of 52% over next 10 years. It's an almost vertical growth opportunity.

As per Richa, this is like a gold rush. But like in any gold rush, the winners will just be a few.

Moving on to news from the energy space, Oil India has exited from a US shale oil venture, selling its 20% stake to its venture partner for US$25 m.

Note that the sale by Oil India is the second exit of an Indian firm from the US shale business in two months.

Oil India and Indian Oil Corporation (IOC) had together in October 2012 bought a 30% stake in Houston-based Carrizo Oil & Gas's Niobrara shale asset in Colorado for US$82.5 m.

While Oil India had acquired 20%, IOC bought 10% in Carrizo's Niobrara basin acreage assets through their respective subsidiaries.

The move by Oil India follows Reliance Industries' exit from US shale, which has not been attractive in generating returns.

Note that Oil India, whose assets in the northeast account for its entire crude oil production and the bulk of gas production, had aggressively scouted for overseas assets in the last decade.

As a result, it acquired interest in oil and gas exploration and producing assets from Venezuela to Russia. It continues to hold those assets.

Oil India share price is currently trading up by 4.9%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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