Money on the markets
A maturing market amid the mayhem
The past two months have been exciting for auto stocks. Helped by better car sales and solid earnings by auto companies, the BSE Auto Index has gained over 20 percent since June, a sharp contrast to the Sensex’s meagre gain of around 4 percent over the same period.
Car sales in India jumped an annual 7.8 percent in June, climbing for a fifth straight month and signifying that demand for autos was picking up.
Automakers have also posted solid Q1 numbers. Maruti Suzuki’s net profit rose 25 percent and the company said it was optimistic about its future growth.
Maruti’s results surprised the market and its shares closed near the all-time high on the result day. The stock has given returns of over 35 percent in the past two months on absolute basis.
Reliance Industries, India’s top listed company, struggled on the first trading day of the week after posting disappointing results on Friday.
The energy major slipped 3.7 percent to close at 1939 rupees, dragging the BSE Oil & Gas Index down 3 percent.
The benchmark’s rise was led by Infosys Technologies, ONGC and Tata Steel, which were up in the range 2-6 percent.
Investor sentiments also had plenty of support from strong global markets.
The benchmark posted a near 500-points gain with stocks like ICICI, HDFC and ITC surging. The Nifty index rose by over 140 points.
Engineering and construction firm Larsen & Toubro fell 3.6 percent and was the main stock that pushed the benchmark lower. Earlier in the day the company had announced its Q1 net profit had risen to 15.98 billion rupees.
The Nifty index rallied 122 points to close above the 4,200 mark.
Reliance Industries led the benchmark’s rise with a 3.5 percent jump. L&T’s rise of 4.1 percent also gave support.
The stock market took cues from strong global markets and upbeat economic data from some regions.
Worries about the global economy and corporate results weighed on investor sentiments throughout trade, which saw the benchmark hitting the day’s low of 13,220.
On Friday the benchmark closed 253 points lower at 13,504 on worries over the monsoon and global economy.
A lot of comparisons are made between China and India but there are myriad differences between the two developing nations — some wide, some not so wide. It would be a huge mistake to believe the two markets and economies are developing along similar lines, or indeed, behaving in the same way, particularly the financial markets.
Take the respective stock markets. The first chart shows the last decade of both India’s benchmark SENSEX stock index and China’s Shanghai Composite. One thing that is immediately evident is that the Composite outperformed India by a long way in the run-up to the very overblown highs. In fact, using 2005 as a starting point it put on a staggering 380 percent while the SENSEX managed 225 percent over the same period.