Indian Indices Erase Gains; ICICI Bank Hits Record High

Thu, 26 Sep 12:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

Share markets in India have erased early morning gains and are presently trading higher. The BSE Sensex climbed over 550 points intraday on the back of possible US-China trade talks.

On Wednesday, US President Donald Trump said a deal to end a nearly 15-month trade war with China could happen sooner than people think and that the Chinese were making big agricultural purchases from the United States, including beef and pork.

Worries about US presidential impeachment bid also receded. Washington plunged into an impeachment crisis on Wednesday, as House Democrats opened an investigation into Trump's campaign season dealings with Ukraine.

However, Trump denied the claims, saying he would release the full transcript of the controversial call.

According to a rough transcript released by the White House, Trump repeatedly persuaded Ukraine's president to look into Democratic rival Joe Biden.

Barring IT stocks and FMCG stocks, all sectoral indices are trading on a positive note with stocks in the metal sector, automobile sector and oil & gas sector witnessing maximum buying interest.

The BSE Sensex is trading up by 165 points, while the NSE Nifty is trading up by 60 points. The BSE Mid Cap index and the BSE Small Cap index are trading up by 0.5 and 0.2%, respectively.

Sterlite Technologies share price is witnessing buying interest today as the company has acquired UK-based Impact Data Solutions Group for an enterprise value of around Rs 1,055.5 million.

The company's wholly owned subsidiary, Sterlite Global Venture (Mauritius) entered into definitive agreements to acquire a 100% stake in Impact Data Solutions Group and its affiliate, together represented as IDS Group.

The transaction is structured to acquire 100%, out of which 80% has been acquired and the remaining 20% will be acquired based on an earn-out model over the next few years.

Shares of the company gained 4% in early trade today on back of the above news.

To know more, you can read the company's latest result analysis on our website.

In news from the automobile sector, Maruti Suzuki share price is in focus today. The company on Wednesday reduced the prices of entry-level cars and diesel variants of all products by Rs 5,000 to boost demand during the festival season.

The company brought down the prices of Alto K10 and 800, and Celerio, as well as the diesel variants of Swift, Dzire, Vitara Brezza, S-Cross and Baleno.

In a press release, the company said "the new prices will be applicable from 25 September across the country. This reduction of price will be over and above the current promotional offers for the company's vehicle range. This announcement around the festival season will help boost customer sentiment and revive the market to create demand."

Note that 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.

The industry's sales and production levels have plunged, leading to job losses. In August, all major OEMs consisting of passenger, commercial, two and three-wheeler manufacturers have reported a massive decline in domestic sales.

As per Society of Indian Automobile Manufacturers' (SIAM) August sales figures, the overall sectoral offtake in the domestic market has plunged 23.6% to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year.

Maruti's domestic wholesales in August fell 36% YoY to 94,728 units. This was the third time since July 2017 that the firm dispatched fewer than 100,000 vehicles to its dealerships in a particular month.

It is interesting to note that the move to reduce prices by India's largest vehicle manufacturer comes after the government reduced corporate taxes.

On 20 September, the government had reduced corporate tax rates from 30% to 22% to boost consumer demand and increase spending by private companies. The effective tax to be paid by the companies, including surcharge and cess, will be 25.17%.

However, in the euphoria of the government's tax rate cuts, an important announcement went unnoticed.

The road transport and highways ministry has proposed a huge increase in re-registration of vehicles which are more than 15 years old.

The proposed hike will be implemented from July 2020. The policy change is aimed at reducing pollution by scrapping older vehicles on the road.

As per Co-head of Research, Tanushree Banerjee, this might come as a welcome relief for automakers who have seen severe fall in sales over the past 1 year.

Signs of Revival in the Auto Sector

Here's what she wrote about it in today's edition of The 5 Minute WrapUp...

• The upcoming festive season and the recent policy measures might just be the trigger needed to revive the sector.
  
  A leading auto player makes it to my list of 7 stocks to buy.
  
  I believe, rising disposable incomes and aspirations of India's youth, will be the key trends benefiting this market leader in the long run.

As per Tanushree, these are just some of the trends that will play a big part in the Sensex 1,00,000 journey.

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