Sensex Opens Over 300 Points Lower; Metal & Realty Stocks Slip

Tue, 3 Sep 09:30 am

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Asian share markets are trading on a mixed note today as the US-China trade tensions continue to rise after China lodged a complaint against the United States at the World Trade Organization over US import duties. The Nikkei 225 is up 0.1% while the Hang Seng is down 0.2%. The Shanghai Composite is trading down by 0.1%.

Back home, India share markets have opened the day on a negative note. The BSE Sensex is trading down by 303 points while the NSE Nifty is trading down by 104 points. The BSE Mid Cap index is trading down by 0.9% and the BSE Small Cap index is trading down by 0.4%.

Barring IT sector, all sectoral indices have opened the day on a negative note with metal stocks and realty stocks witnessing maximum selling pressure.

The rupee is trading at Rs 72.07 against the US$.

In news from the steel sector, Tata Steel on Monday said it would shut parts of its non-core businesses in the United Kingdom, a move that could cost about 400 jobs.

As per an article in a leading financial daily, the steelmaker proposed to close its loss-making Orb Electrical Steels site in South Wales, potentially affecting up to 380 jobs, as it was "unable to find a way forward" for the business.

The company said it would cost the company more than US$ 61.4 million to upgrade the site to produce steel for electric vehicle production.

The company added it had signed a deal to sell Cogent Power, another division of Cogent, to Japan's JFE Shoji Trade Corp. It also plans to close another non-core business, Wolverhampton Engineering Steels Service Centre, as it did not find a buyer.

The news comes weeks after Turkey's military pension fund OYAK reached a provisional agreement to take over British Steel, which Greybull Capital bought for one pound from Tata Steel three years ago.

British Steel was put into compulsory liquidation on May 22 after Greybull Capital failed to secure funding to continue its operations.

Tata Steel share price has opened the day down by 2.6%.

Moving on to news from the automobile sector, Maruti Suzuki has reduced its production by 34% in the month of August 2019. The company produced a total of 1,11,370 units in August as against 1,68,725 units in the year-ago month.

This is the seventh straight month that the country's largest car maker reduced its output. In July, the automaker had cut its production by 25.2% at 1,33,625 units.

Passenger vehicles' production declined by 33.7% at 1,10,214 units as against 1,66,161 units in August 2018.

Production of mini and compact segment cars including Alto, New WagonR, Celerio, Ignis, Swift, Baleno and Dzire stood at 80,909 units as against 1,22,824 units in August last year, down 34.1%.

Production of utility vehicles such as Vitara Brezza, Ertiga and S-Cross declined 34.9% to 15,099 units as compared with 23,176 units in the year-ago month.

On Sunday, the company had reported a 33% dip in total sales at 1,06,413 units as compared with 1,58,189 units in August 2018.

The company also said that it will make all the small cars in its portfolio available in compressed natural gas (CNG) variants to reduce dependence on imported oil and cut down on vehicular pollution.

The company's Chairman RC Bhargava told The Economic Times that "all small cars in our portfolio will get converted to CNG. There is an acceptance from the government that CNG is a cleaner fuel, and it is being accepted for transportation. They are setting up 10,000 CNG distribution outlets".

Maruti Suzuki share price has opened the day down by 1.1%.

To know more, you can read Maruti Suzuki's latest result analysis and Maruti Suzuki's 2018-19 annual report analysis on our website.

Speaking of the Indian auto industry, note that the sluggish market environment prevalent in the first quarter has continued in the beginning of the second quarter as well as its impact are visible in the despatch volumes.

The sector has been battling many negative forces - slowing economic activity, rising car prices (led by stricter emission norms and insurance costs), shortage of financing options because of the NBFC crisis, and weak rural sentiment. All these factors have dampened demand.

Have a look at the chart below:

April to July Auto Sales Are Down in the Dumps

It seems unlikely that the upcoming festival season will work wonders in terms of bolstering growth...unless the government steps in to help the industry.

In the below video, Tanushree Banerjee talks about what helped the auto stocks back in 2002, become 7, 15 and 24 baggers in a decade.

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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