After opening the day in green, share markets in India witnessed a positive day of trading and ended the day in green. Sectoral indices were mixed, with stocks in the pharma sector and stocks in the capital goods sector leading the gains.
At the closing bell, the BSE Sensex stood higher by 209 points (up 0.6%) and the NSE Nifty closed up by 56 points (up 0.5%). The BSE Mid Cap index ended the day up 0.9%, while the BSE Small Cap index ended the day up by 0.5%.
Asian stock markets too finished in green. As of the most recent closing prices, the Hang Seng was up by 0.1% and the Shanghai Composite was up 0.9%. The Nikkei 225 was up by 0.3%. Meanwhile, European markets were trading in red. The FTSE 100 was up by 0.3%, The DAX, was down by 0.1% while the CAC 40 was down by 0.3%.
The rupee was trading at Rs 67.42 against the US$ in the afternoon session. Oil prices were trading at US$ 76.7 at the time of writing.
In news from around the globe, US President Donald and his North Korean counterpart have reached an agreement for deneuclearisation of the hermit kingdom after a much-touted summit in Singapore.
Trump said that Kim Jong Un had made an unwavering commitment to the complete denuclearisation of the Korean peninsula but sanctions against North Korea would remain in effect until it is carried out.
Trump also added that the US would be stopping very provocative and costly military exercises with South Korea to facilitate denuclearisation negotiations with North Korea.
The meeting, deemed historic seemed to have only a symbolic reassurance as there was no formal peace treaty signed. The joint-document signed by both the nations also gave only a few details on how the process is to take place, leading political analysts to believe it to be only symbolic progress rather than a tangible one.
However, market participants worldwide seemed to be convinced as Asian stocks surged on the news of the agreement.
Moving on to news from the . Auto sales for May continued to grow at a robust pace, with only scooters sticking out as a sore thumb.
While sales of scooters fell 1.4% in May, motorcycle sales, though advancing at the slowest pace in seven months, rose 15.2% to more than 1.22 million units during the month because of wedding season demand, according to monthly sales data released by industry lobby Society of Indian Automobile Manufacturers (SIAM).
Motorcycle sales had taken a hit due to a prolonged slump in rural demand, where customers prefer cheaper motorcycles compared to urban India's penchant for gearless scooters. However, a normal monsoon as predicted by the IMD, and increased public spending in rural areas is set to boost demand in rural areas.
Meanwhile, sales of passenger cars and utility vehicles grew 19.6% and 17.5%, respectively, on the back of a low base in May and June last year as car buyers had delayed their purchases in anticipation of a price decline post the implementation of the goods and service tax (GST) on 1 July last year.
Sales of commercial vehicles rose 43% largely due to a low base prompted by substantial sales before the Bharat Stage-IV (BS-IV) emission norms came into effect on 1 April last year.
Going forward however, it will be interesting to see if vehicle sales are able to continue the robust growth rate, considering growing crude prices, which ultimately affect buyer decision.
Auto Volumes are a Good Indicator of Economic Growth
Auto sales are one of the major indicators for growth in the Indian economy.
For the first nine months of FY18 at least, the auto industry has done well to grow in double digits after some lean years.
Vehicle sales grew by 11.3% YoY during this period. The best performing of the lot were commercial vehicles (CVs), volumes of which grew by 15% YoY. Two-wheelers also did well growing by around 12% YoY.
In fact, in a recent conference call, the management of the largest two-wheeler company in the country - Hero Motocorp - said they expect the two-wheeler industry to grow in double digits in FY19 as well.
We're keeping a close eye on auto stocks in this correction.
This article was originally published in English at www.equitymaster.com
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