Indian Indices Extend Losses; Maruti Suzuki, Hero MotoCorp Among Top Losers

Mon, 8 Jul 12:30 pm

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Share markets in India have extended their losses tracking a major selloff in global equities. All sectoral indices are trading in red with stocks in the realty sector, automobile sector and capital goods sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 578 points (down 1.5%), while the NSE Nifty is trading down by 180 points (down 1.5%). The BSE Mid Cap index is trading down by 1.5%, while the BSE Small Cap index is trading down by 2.2%.

The rupee is currently trading at Rs 68.67 against the US$.

While the Budget 2019 failed to cheer Indian stock markets, Tanushree Banerjee's Rebirth of India call remains intact. She explains how investors could continue to make the most of the irreversible trends and India's US$ 5 trillion potential in the video below.

You can read about the opportunities in Rebirth of India here: defence boom, infrastructure sector reforms, NBFC Crisis and Electric Vehicle Disruption.

In news from the IT sector, Mindtree share price is witnessing selling pressure today after three founders of the company resigned following a change of control.

Shares of the company dipped over 10% in early trade today on back of the above news. The stock was trading close to its 52-week low price of Rs 753 touched on October 26, 2018 in intra-day deal.

In an exchange filing on Friday, Mindtree said its Executive Chairman Krishnakumar Natarajan, Executive Vice-Chairman and Chief Operating Officer (COO) N S Parthasarathy and Managing Director and Chief Executive Officer (CEO) Rostow Ravanan had put in their papers as members of the board and as well as employees of the company.

Last week, Larsen & Toubro (L&T) was categorized as the IT firm's 'promoter' after the acquisition of 60.1% stake in Mindtree.

Construction major L&T held 98.7 million equity shares in Mindtree following its recently-concluded open offer, according to the filing by the Bengaluru-based tech firm.

To know more about the companies, you can read Mindtree's 2018-19 annual report analysis and L&T's 2018-19 annual report analysis on our website.

Moving on to news from the automobile sector, country's largest car-maker Maruti Suzuki is in talks with banks to push them to ease their strict lending norms and offer retail financing to dealers of the company.

Company's executive director in an interview said, "we recently tied up with Bank of Baroda and are in close touch with other banks to strengthen funds availability for inventory financing by our dealer partners. We are in talks with all leading banks to further support the industry with increased allocation of funds for auto sector".

The company is also trying to strengthen the business model of its dealers by focusing on revenue generation from other streams such as vehicle servicing, insurance, auto accessories and selling used cars through the True Value outlets.

In other news, the company has cut vehicle production for the fifth consecutive month in June. In a regulatory filing, the company said it slashed total vehicle production, including Super Carry LCV, by 15.6% last month to 1,11,917 units as compared to 1,32,616 units in the year-ago month.

Shares of Maruti Suzuki fell over 3% in early trade today on back of the above news.

Total passenger vehicle production stood at 1,09,641 units, down 16.3% from 1,31,068 units in June 2018.

The auto major cut production of mini segment vehicles, including models like Alto, by 48.2% to 15,087 units last month as against 29,131 units in the year-ago period. Similarly, it slashed production of compact segment cars like WagonR, Swift and Dzire by 1.5% to 66,436 units in June from 67,426 units earlier.

Production of utility vehicles witnessed a decline of 5.3% to 17,074 units, as against 18,023 units in June last year.

Reports state that Maruti had cut total production by over 18% in May. In March, the company had reported a production cut of 20.9%, while in February the company had reduced production by over 8% to 1,48,959 units from 1,62,524 units produced in the year-ago month.

Note that, passenger sales fell 20.5% in May 2019 compared to May 2018. This follows a 17.1% year on year decline in April as well.

The decline in May is the worst seen since 2001.

Never Ending Woes For The Automobile Sector

Here's what Tanushree Banerjee wrote about it in one of the recent edition of The 5 Minute WrapUp...

• Multiple factors have affected the auto sector of late.
  
  The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms... they have all taken their toll.
  
  Also, this sector is ripe for disruption with electric vehicles and ride sharing applications.
  
  Maruti, India's largest car maker announced it would stop making diesel cars from April next year.
  
  The coming one year will be a real test for India's auto companies.
  
  It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.
  
  There is one thing I know for sure, dear reader. Only the ones adapting their business models to the rapidly changing environment will survive and thrive.

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

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