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Indian Indices End Flat; Metal and Banking Stocks Witness Buying

Wed, 30 Jan Closing

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   Pre-Open   

   09:30 am   

   12:30 pm   

Indian share markets continued to trade near the dotted line during closing hours and ended the day on a flattish note. Stocks from the metal sector and banking sector witnessed buying interest, while stocks from the telecom sector and energy sector were trading in the red.

At the closing bell, the BSE Sensex stood lower by 1 point and the NSE Nifty stood flat. The BSE Mid Cap index closed up by 0.2%, while the BSE Small Cap index ended the day up by 0.8%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood up by 0.3% and the Nikkei was trading down by 0.3%. The Shanghai Composite was trading up by 0.1%.

European markets were trading on a positive note. The FTSE 100 was up by 1.3%. The DAX was up by 0.1% while the CAC 40 was up by 0.8%.

The rupee was trading at 71.16 to the US$ at the time of writing.

In the news from the steel sector, according to World Steel Association, India has replaced Japan as the world's second-largest steel producing country, while China is the largest producer of crude steel, accounting for more than 51% of production.

The report by the global steel body stated that China's crude steel output jumped 6.6% to 928.3 million tonnes (MT) in 2018 from 870.9 MT in 2017. The country's share increased from 50.3% in 2017 to 51.3% in 2018.

India's crude steel production in 2018 stood at 106.5 MT, up 4.9% from 101.5 MT in 2017. This meant India has replaced Japan as the world's second-largest steel producing country. Japan produced 104.3 MT in 2018, down 0.3% compared to 2017.

Global crude steel production reached 1,808.6 MT in 2018 from 1,729.8 MT in 2017, a rise of 4.6%.

Note that in the last 6 years, India has been the world's fastest growing steel producer, among the top 10. This is evident in the chart below:

India's Steel Production Growing at the Fastest Rate

Over the last 6-year period, India's steel production grew at a CAGR of 6%. Countries such as Germany and Japan registered negative growth. Growth has been flat in USA, South Korea, Russia, and Brazil.

China, the world leading steel producer, which saw double-digit growth over 2001-2010, grew marginally by 4% CAGR in the last six years.

Here's what we wrote about this in one of our recent editions of The 5 Minute WraUp...

• Importantly, India's production growth is due to strong domestic demand. Particularly, on the back of strong infrastructure development and housing demand, especially affordable housing.
  
  No wonder India has surged past Japan and USA to become the second largest steel producer in the world.
  
  ...In the coming years, steel demand will grow in India. This is on the back of increased infrastructure construction, a thrust on affordable housing, and the thriving auto sector.
  
  I can give you two more reasons... our country's favourable demographics and increasing use of steel in rural areas.
  
  And don't forget that China's stringent environmental protection measures will lead to capacity cuts in that country. This will help support the profitability of our industry.
  
  India's steel industry is in a sweet spot.

And this is just one of the 50 irreversible trends in the Rebirth of India.

Moving on to the news from the automobiles space, Bajaj Auto share price was in focus today as the company today reported a 16% year-on-year (YoY) rise in net profit at Rs 11 billion for the December quarter.

Total income for the quarter rose 19% YoY to Rs 78.8 billion against Rs 65.9 billion in the same quarter last year.

Operating profit for the quarter fell 2% YoY to Rs 12.2 billion from Rs 12.5 billion in the year-ago quarter.

The company's motorcycle segment recorded 38% growth in volume in the December quarter. This compares with the industry growth of 11%.

Overall share in the domestic motorcycle industry for the company increased to 20.3% against 18.6% in September quarter and 16.3% in the year-ago quarter.

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.

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

Apart from the above, market participants were also tracking ICICI Bank share price, JSW Energy share price, and Torrent pharma share price as these companies announce their December quarter results.

You can also read our recently released Q3FY19 results of other companies here: Reliance Industries, Federal Bank, Infosys, TCS, Trident, HDFC bank, Maruti Suzuki, DHFL, Gruh Finance.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

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

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