Sensex Opens Flat; Automobiles and IT Stocks Drag

Thu, 2 May 09:30 am

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Asian stocks marked time on Thursday with two major centers, Japan and China shut for holidays, while shares in Hong Kong are higher today as the Hang Seng gains 0.5%. US stocks ended lower on Wednesday and the S&P 500 snapped a three-day streak of record high closes as comments from Federal Reserve Chairman Jerome Powell appeared to dampen hopes the central bank could move later this year to cut interest rates.

Back home, India share markets opened on a flat note with a negative bias. The BSE Sensex is trading down by 49 points while the NSE Nifty is trading down by 26 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.2%.

Sectoral indices have opened the day on a mixed note with telecom and FMCG stocks trading in green. Automobiles stocks and IT stocks are witnessing maximum selling pressure.

The rupee is currently trading at 69.52 against the US$.

In the news from the automobiles sector. Maruti Suzuki India on Wednesday reported a slump of 17.2% in sales for the month of April 2019.

The total sales volume stood at 1,43,245 units in April 2019. The company had sold 1,72,986 units in April last year.

Maruti recorded a decline of 19% in domestic sales (PV plus LCV) in April 2019, selling 133,704 units against 164,978 units in the same month last year.

Total domestic passenger vehicle sales also dropped from 163,434 units to 131,385 or 19.6%.

Reportedly, its export sales rose 14.6% from 8,008 vehicles in April 2018 to 9,177 vehicles this year.

The entry-level segment has witnessed a decline of 39.8% in April. Maruti sold 22,766 units of the Alto 800 and previous generation WagonR against a base of 37,794 units.

The company's compact vehicle segment, which sells the new-generation WagonR, Alto K10, Swift, Ignis, Baleno, Celerio, Dzire and the TourS recorded a decline of 13.9% selling 72,146 units against a base of 83, 834 units, which were sold in the same period last year.

The sales of its mid-size sedan, the Ciaz took a heavy dip of 45.5% selling 2,789 units against 5,116 units which were sold in the corresponding month last year.

Moreover, sales numbers are expected to fall in the next year as well, as Maruti Suzuki has said that it will stop selling diesel cars in its portfolio from April 2020, when the new BS VI fuel economy norms kick in, which will make diesel vehicles significantly more expensive.

Note that, all the components of BSE Auto index have fallen in 2018. Tata Motors crashed over 60% and Motherson Sumi Systems plunged over 40% in past one year. While, Bharat Forge, Ashok Leyland and Maruti Suzuki fell over 30% during the same period.

But, one thing we must keep in mind is that not all auto companies will make money over time. And also, you shouldn't stay away from auto stocks altogether.

Even Tanushree Banerjee, Co-head of research at Equitymaster believes that there are businesses in this sector that you cannot ignore. She is particularly talking about the blue-chip auto stocks.

Here's Tanushree:

• One out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space. They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.
  
  Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times.
  
  This could be the opportunity long term investors were waiting for.

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Maruti Suzuki share price opened down by 1.6%.

Moving on to the news from pharma sector. As per an article in a leading financial daily, Lupin in alliance with Natco Pharma has received approval for Bosentan Tablets, 62.5 mg and 125 mg, from the US Food and Drug Administration (USFDA) to market a generic version of Actelion Pharmaceuticals Limited's Tracleer Tablets, 62.5 mg and 125 mg.

Lupin and Natco's Bosentan Tablets are the generic version of Actelion Pharmaceuticals Limited's Tracleer Tablets, the reports noted.

It is indicated for the treatment of pulmonary arterial hypertension in adults to improve exercise ability and to decrease clinical worsening.

According to IQVIA MAT data released in March 2019, Bosentan Tablets, 62.5 mg and 125 mg had annual sales of approximately US$84.8 million.

To know more about the company, you can access to Lupin's Q3FY19 result analysis and Lupin's 2017-18 Annual Report Analysis on our website.

Lupin share price opened the day up by 0.2%.

And 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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