After opening the day flat, share markets in India witnessed volatile trading activity throughout the day and ended the day in red. Sectoral indices ended mixed, with stocks in the FMCG sector and stocks in the auto sector leading the gains.
At the closing bell, the BSE Sensex stood lower by 71 points (down 0.2%) and the NSE Nifty closed down by 20 points (down 0.2%). The BSE Mid Cap index ended the day down 0.7%, while the BSE Small Cap index ended the day down by 0.4%.
Asian stock markets finished in red. As of the most recent closing prices, the Hang Seng was down by 0.2% and the Shanghai Composite was down by 1%. The Nikkei 225 was down by 0.8%. Meanwhile, European markets were trading in green. The FTSE 100 was up by 0.4%, The DAX, was up by 1.2% while the CAC 40 was up by 0.9%.
The rupee was trading at Rs 68.95 against the US$ in the afternoon session. Oil prices were trading at US$ 78.11 at the time of writing.
As per an article in a leading financial daily, Tata Group is evaluating a proposal to integrate its food and beverage businesses into a single company.
The company is considering separating the salt and branded lentils businesses of Tata Chemicals Ltd. and folding them into Tata Global Beverages Ltd.
The group is also considering merging Tata Coffee Ltd., which owns coffee plantations and tea gardens, with the beverages company, and entering the dairy business.
The proposal is part of chairman N. Chandrasekaran's larger strategy to combine related businesses under a single umbrella to increase efficiency and simplify the conglomerate, which includes more than 100 independent operating companies.
In April, the Tata group said it will create a single entity called Tata Aerospace & Defence by merging all allied businesses.
Reportedly, the rationale behind folding food and beverage businesses into a single company is nothing but de-risking.
The group is weighing different options and a final decision hasn't been made about the units that will be merged and into which company. A special task force has been formed and has made presentations to the board of Tata Sons Ltd., the group's holding company.
Tata stocks opened the day on a mixed note with Tata Investment Corporation and Tata Sponge leading the pack of gainers.
Moving on to news from stocks in the auto sector. Maruti Suzuki share price was among the stocks in focus today after the company revealed plans to add production capacity.
Notably, the auto leader aims to add capacity of over 750,000 units from three production lines in Gujarat plant by 2020, taking the total capacity to over 2.2 million units a year.
The company, which already has a market share of over 50% in the domestic passenger vehicle segment, is also initiating the process to study ways to further expand production capacity beyond 2.2 million units per annum after 2020.
The first assembly line of Suzuki-owned Gujarat plant has already started rolling out products. It has a production capacity of 250,000 lakh units per annum.
Post the capacity expansion, the company is first aiming for total sales including exports of 2 million, and then only domestic sales totaling to 2 million units per year by 2020.
Auto Volumes are a Good Indicator of Economic Growth
Note that 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.
Maruti Suzuki share price ended the day up 1.3%.
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