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Indian Indices Trade Marginally Higher; Telecom Sector Down 3.6%
Fri, 11 May 12:30 pm

Stock markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the energy sector and metal sector witnessing maximum buying interest. Telecom stocks are trading on a negative note.

The BSE Sensex is trading up 102 points (up 0.3%) and the NSE Nifty is trading up 37 points (up 0.3%). The BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 67.26 to the US$.

From the banking sector, Union Bank of India share price is witnessing selling pressure today as the public-sector lender reported a net loss for the fourth quarter on the back of higher bad loan provisioning.

PC Jeweller share price is trading on a volatile note today. The stock of the company witnessed buying interest during morning hours today after the board approved share buyback of Rs 4.2 billion. However, the momentum was short-lived as the stock witnessed selling pressure thereafter and went to trade marginally lower during noontime.

The company in a BSE filing said that it will buy back up to 1,21,14,286 fully paid-up shares of Rs 10 each. This comprises 3.07% of the total paid-up equity capital at Rs 350 per share.

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Speaking of buybacks, investors should not assume buybacks are always good. Here's an excerpt of what Rahul Shah, co-head of Research, wrote in an edition of The 5 Minute Wrapup:

  • The reason behind the buyback must be investigated. At the end of the day, an increase in earnings should be more a function of the inherent robustness of the business, as that's what will help it continue to grow at a healthy pace.

The topic also brings us to ask: Do buy-backs offer an arbitrage opportunity for retail investors? Ankit Shah has answered this question in one of the editions of Equitymaster Insider. You can access the issue here (requires subscription).

In the news from the automobile sector, as per the data available at SIAM, automobile sales witnessed a strong growth in the month of April.

The industry registered an overall growth of 17.4% in April 2018 to more than 23.8 lakh units from the same period last year.

As per the data, domestic passenger vehicle sales rose 7.5% to 2,98,504 units in April from 2,77,683 units in the same month last year.

Domestic car sales were up 4.9% to 2,00,183 units as against 1,90,854 units in April 2017.

Total two-wheeler sales in April rose 16.9% to 19,58,241 units compared to 16,74,787 units in the year-ago month. Sales of commercial vehicles were up 75.9% YoY to 72,993 units in April.

Note that the auto industry also did exceptionally well for the first nine months of FY18 by growing 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.

Auto Volumes are a Good Indicator of Economic Growth

This development bodes well for the economy as well, as the volume of vehicles sold are one of the major indicators of economic growth.

We're keeping a close eye on auto stocks and will keep you posted on all the recent developments in this space.

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

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