Indian markets open firm

Tue, 3 Nov 09:30 am

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The major Asian stock markets have opened the day in green, with stock markets in Hong Kong (up 1.4%) and Indonesia (up 1.3%) being the top gainers. The major stock indices in Europe and US ended their previous session to closed on an encouraging note. The benchmark indices of US closed higher by about by 1.4%. The rupee is trading at 65.44 per US dollar.

Indian stock markets have too opened the day on a positive note. BSE-Sensex is trading higher by 142 points (up 0.5%) and NSE-Nifty is trading higher by 31 points (up 0.4%). S&P BSE Midcap and S&P BSE Smallcap have surged upwards. Both the indices are trading higher by 0.5% and 0.7% respectively. Major sectoral indices have opened the day on a positive note. Stocks from metals & mining, banking and engineering & capital goods sector are witnessing maximum buying interest.

As per an article in leading financial daily, growth in India's manufacturing sector slowed to a 22 months low for the month of October. Nikkei Manufacturing Purchasing managers Index (PMI) fell to 50.7 in October from 51.2 in September. If the index falls below 50, it is indication of contraction in the manufacturing activities.

The domestic demand remains subdued and the flow of new orders dropped to 51.2 in October from 52.5 in September. The drop in the flow of orders has reached a two year low. The current economic climate has deterred the clients from committing to the new projects.

Reportedly, export orders grew slightly faster than that seen in the month of September. The Reserve Bank of India (RBI) has reduced the interest rates by 125 bps since January. The effect of a cut in interest rate will boost the manufacturing activities. However the result of the same will be seen in the coming 3-4 quarters. Government's efforts to fast track and push forward the crucial reforms will also play a substantial role to kick-start the manufacturing activities.

As per an article in leading financial daily, car sales across various companies rose in the month of October. The higher demand came in as a result of the festive season, launch of new models and aggressive promotions.

The sales of Maruti Suzuki grew by 24% in this month on a YoY basis. Reportedly, the volumes were boosted by the growth in the compact car models. Such car models include Swift, Ritz, Celerio, Dzire and the recently launched Baleno. Till date, company has received booking of around 10,000 units for Baleno. The newly launched Baleno is available exclusively in the 'Nexa' showrooms. However the demand from its recently launched 'S-Cross' model has not been encouraging.

Tata Motor's too reported a rise in the sales of passenger vehicles by 11% in the month of October on a YoY basis. Mahindra & Mahindra (M&M) also reported a growth in the sales of its passenger vehicles by 19%. The sales have been the highest in the preceding two years. The growth was led by its recently launched Sports Utility Vehicle (SUV) named 'TUV 300'.

After a couple of challenging years, most auto companies are gearing to increase their sales volumes, not only in the domestic market but also in the international markets through the launch of new models. There has been a further adoption of global best practices translating into better quality. Having said that, competition is also intensifying and hence it will be interesting to see which companies will be able to sustain healthy growth going forward.