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No Respite for Indian Markets
Tue, 2 Feb Closing

The Indian equity markets witnessed volatility throughout the day and ended deep in the red to finish their session. Stocks across the board ended on a weak note with those from the metal, energy and oil & gas facing the maximum selling pressure. The BSE Sensex closed lower by 286 points, while the NSE Nifty closed lower by 100 points. Midcaps and small caps also witnessed selling pressure. The S&P BSE Mid Cap index and the S&P BSE Small Cap index closed the day with losses of 1.7% and 1.3% respectively.

Asian markets finished mixed. The Nikkei fell 0.6%, while the Shanghai Composite was up around 2.3%. The Hang Seng fell by nearly 0.8%. Meanwhile, European markets are trading lower today with shares in France off the most. The DAX is down 1.4%, while London's FTSE 100 is off 1.7% and France's CAC 40 is lower by 1.9%. The rupee was trading at 67.99 against the US$ at the time of writing.

Stocks in the automobile sector ended the day on a mixed note with Escorts and Force Motors leading the losses. As per a leading financial daily, auto major Mahindra & Mahindra (M&M) has completed sale of its entire 71.19% stake in Swaraj Automobiles (SAL) for Rs 248 million to b4S Solution. The development comes as the company during the last year had entered into an agreement with b4S Solutions for the sale of its entire stake in SAL. Under the agreement, the company had fixed the price at Rs 145.5 per equity share.

One shall note that M&M had acquired stake in SAL through open offers when it bought 43.3% in Punjab Tractors, which held shares in the company.

On a separate note, M&M has reported 9.6% increase in its total sales for the month of January on a YoY basis. The company sold 43,789 vehicles last month as against 39,930 vehicles in the same period last year. In the domestic market, the company's sales were up by 9.8% YoY. Sales of passenger vehicles, including Scorpio, XUV 500, Xylo, Bolero and Verito, increased 12.8% YoY. Commercial vehicles sales grew 11% YoY. Exports were up by 7.3% YoY during last month at 3,096 units.

Most of the growth was led by the increasing sales from TUV300 and the recently launched KUV100. The company posted a double digit growth despite facing a recent setback from Supreme Court's decision to ban diesel vehicles above 2000cc capacity.

Stock of Mahindra & Mahindra ended down by around 1.8% today.

Stocks in the steel sector ended on a negative note with Tata Steel and SAIL bearing the maximum brunt. Indian Ratings and Research has maintained a negative outlook on the steel sector for the next financial year as the sector is going to continue to face pricing pressure. The agency expects that steel consumption demand will grow by 6.3%-6.5% during the next fiscal on the back of traction in key end-user industries such as construction, capital goods and consumer durables.

The report stated that the benefit of gradual domestic demand growth will be offset by the weak product pricing capability caused by global overcapacity and cheap imports. Further, there would be no major improvement in prices over the near to medium term as China is seen exporting its problems worldwide.

Steel players in India are finding it difficult to maintain attractive margins on the back of continued dumping of cheap steel by China in global markets. Moreover, they are also facing increasing competition. With growth in domestic demand being captured by China, Russia, Japan and South Korea, Indian steel makers are facing pressures on their sales and margins.

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Feb 23, 2018 (Close)