After opening the day in green, share markets in India have traded on a volatile note and are presently trading below the dotted line. Sectoral indices are trading mixed with stocks in the FMCG sector and stocks in the consumer durables sector trading in red. While stocks in the banking sector are trading in green.
The BSE Sensex is down by 45 points (down 0.1%) and the NSE Nifty is trading down by 17 points (down 0.2%). Meanwhile, the BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 72.28 to the US$.
In news from stocks in the auto sector. Domestic passenger vehicle sales for August witnessed a drop as sales fell due to ongoing floods in various parts of the country.
Domestic passenger vehicle sales were down by 2.3% in August as compared to the same period a year ago.
Car sales were down 1% 196,000 units in August, while two-wheeler sales grew by almost 3%. Motorcycle sales were up by 6.2% on the back of a positive monsoon for most parts of India.
Commercial vehicles too, outperformed as sales jumped by 30% in August as compared to the same period a year ago.
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.
Moving on the news from stocks in the pharma sector. Sun Pharma share price is among the most active stocks today after it was reported that the US drug regulator - US Food and Drug Administration (USFDA) is set to inspect its Mohali, Punjab facilities.
The USFDA had recently inspected the company's Halol, Gujarat facility and issued six observations in form 483.
While the company did not clarify on the observations, it was reported that the observations include aspects such as lack of appropriate test measures for lab controls along with some procedural issues too.
As per the US health regulator, Form 483 notifies the company's management of objectionable conditions at the facility inspected.
The USFDA had inspected Sun Pharma's Mohali plant in November 2016 and had issued four observations. While the regulator had cleared the facility a while ago, it has decided to re-inspect the facility, just days after concluding inspection of the Halol, Gujarat unit.
At the time of writing Sun Pharma share price was trading up by 1.1%.
Speaking of pharma stocks, the rupee's recent weakness has pushed up the BSE healthcare index, which was (26% down) at the bottom of the market for the past three years. However, the index has been the top performer in the past month and is up 11%.
In the past three months, the BSE healthcare index has gained as much as 23%. In comparison, BSE Sensex is up about 9% during the same period.
Among the individual stocks, Sun Pharmaceutical Industries, Dr Reddy's Laboratories, Aurobindo Pharma, and Glenmark Pharma outperformed the index by gaining in the range of 24% to 36%, while Divi's Laboratories and Lupinwere up 13% and 10%, respectively.
In such an environment, it makes sense for investors to be selective while buying stocks. Focus on value and the underlying fundamentals of the business.
Comments
Log in or sign up to join the conversation.