Indian Share Markets Trade Flat; Tata Motors Gains on JLR Sales

Indian share markets continue to trade marginally higher in the noon session. Gains are largely seen in realty stocks, FMCG stocks and metal stocks. Meanwhile, power stocks and capital goods' stocks are witnessing majority of the selling activity.

The BSE Sensex is trading higher by 45 points and the NSE Nifty is trading down by 2 points. Meanwhile, the BSE Mid Cap index is trading down by 0.4% & the BSE Small Cap index is down by 0.1%. The rupee is trading at 63.34 to the US$.

2017 was a surprising year to say the least. The S&P BSE Realty Index grew by a staggering 98% in CY 2017 alone, making it one of the best performing sectors on the Index. The government's focus on affordable housing and RERA (Real Estate Regulation Act) gave investors hope of a revival in the sector.

Best & Worst Performing Sectors - S&P BSE Index

Post Notebandi came GST. This was also supposed to hamper day to day operations of companies until the whole GST process was streamlined. Consumer durable stocks remained immune to the disruption and logged in a 99% growth. A healthy monsoon also helped boost investor sentiment in consumer durable stocks.

It is also important to note that the dual effects of Notebandi and GST did show on earnings.

Automobile stocks are trading on a mixed note with Ashok Leyland share price and Escorts Ltd share price leading the gains.

Tata motors share price is trading up by 1.1% on record Jaguar Land Rover global sales in 2017.

Jaguar Land Rover's sales rose 7% to a record 621,109 vehicles in 2017 but Britain's biggest carmaker said it faced tough conditions in its home market due to weakening consumer confidence and a planned diesel tax rise on new cars.

The company has embarked on a major turnaround plan since being bought by the Tata group in 2008. This includes investment in new models and expansion of production with the aim of building around 1 million vehicles a year by the turn of the decade.

It said growth in China, its largest market, and in the United States helped to offset difficult conditions in Britain and the rest of Europe, where the demand was flat.

As per the reports, over the next three months, a series of launches are scheduled for JLR, and this should drive strong volume growth.

Moving on to news from the economy. Attributing the continuing slowdown to the after-effects of the demonetisation exercise, the Goods and Services Tax (GST) implementation and weakness in agriculture, rating agency, CRISIL in its latest report has maintained its projection of India's economic growth in 2018-19 to 7.6% on the low base.

The CRISIL note comes days after the Central Statistics Office (CSO) came out with its First Advance Estimates of National Income, 2017-18, in which it stated that Indian economy is expected to grow at a four-year low of 6.5% in the current fiscal year 2017-18, as against 7.1% in the fiscal year 2016-17.

Adding further, it said that in FY19 as well, growth will continue to be consumption-led as inflation will be under control and interest rates are expected to be soft. It also said that increase in government employees' salaries with the implementation of the seventh pay panel recommendations will also help. It added that the government's focus on spending towards agriculture and rural themes will also be of help.

According to the report, the government's ambitious Rs 2.11 trillion recapitalisation plan over two years will ensure that the state-run banks are well positioned to support the growth.

This article was originally published in English at www.equitymaster.com

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