Indian Indices Open on a Positive Note; Energy and Auto Stocks Lead

Thu, 17 Jan 09:30 am | Monish Vora, TM Team

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Asian shares are higher today as upbeat bank earnings bolstered Wall Street, while an anti-climactic end to the latest chapter in the Brexit saga gave sterling a moment's peace.

Back home, India share markets have opened the day on a positive note. Barring FMCG sector, all sectoral indices have opened the day in green with energy stocks and auto stocks witnessing maximum buying interest.

The BSE Sensex is trading up by 80 points while the NSE Nifty is trading up by 23 points. The BSE Mid Cap index opened the day up by 0.2% while BSE Small Cap index opened up by 0.1%.

The rupee is currently trading at Rs 71.18 against the US$.

In the news from the currency space, the Indian rupee opened higher by 9 paise at 71.15 against the US$ today.

Despite trade deficit narrowing in December, rupee failed to witness any major appreciation.

Market participants will track Reliance Industries, HUL, Cyient, Rallis India, Federal Bank as they announce their December quarter results today.

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In the news from the banking sector, State Bank of India is witnessing buying interest today as it is planning to sell over Rs 150 billion worth bad loans belonging to Essar Steel to recover its dues from the debt-laden steel maker.

The bank invites expression of interest from banks, NBFCs, FIs for the proposed sale of its non-performing financial asset with total dues of Rs 154.3 billion.

SBI share price has opened the day up by 0.3%.

Moving on to the news from the automobiles sector, Maruti Suzuki share price is in focus today. The country's largest carmaker is planning to invest over Rs 130-140 billion in new products, technologies and expansion of plant capacity over the next couple of years.

As per an article in The Economic Times, the carmaker is planning these measures to ride out of trouble after posting its lowest growth rate in the past five years in a slowing market.

The company is also likely to conclude its negotiation with the Haryana government to move its Gurugram facility to a new location on the outskirts of Manesar.

Here's an excerpt from the article:

• 'One of the big reasons behind slowing growth in 2018 was the lack of major product action from the company. With the aggressive product line-up for the coming 18-24 months, Maruti will again take the lead in driving growth and excitement in the market'.

Maruti Suzuki share price has opened the day up by 0.4%.

Speaking of automobiles sector, India's auto sales slowed down in last two months due to weak consumer sentiment because of high interest rate, a spike in fuel price and insurance cost and liquidity crunch.

During H1 of FY18, the sector grew 11% in which CV & tractor segment expanding 34% and 13% while PVs grew by only 7%. On the other hand, higher rural participation has led the 2-wheeler & 3-wheeler segments to grew 36% and 10%.

Also, speaking of blue-chip automobile stocks, one out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space.

They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times. This is evident in the chart below:

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Tanushree Banerjee, Co-head of Research at Equitymaster believes, this could be the opportunity long term investors were waiting for.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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