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Major Asian stock markets have opened the day on a negative note. The stock markets in Hong Kong and China are trading lower by 0.68% and 0.32%, respectively. Major indices in Europe ended their session on a negative note. US markets also ended their previous session in the red. The rupee is trading at 66.86 per US$.
Indian stock markets have opened the day near the dotted line. The BSE Sensex is trading down by 35 points (down 0.1%) and NSE Nifty is trading down by 9 points (down 0.1%). The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.4%. Losses are led by IT, banking and consumer durables stocks. Power stocks are leading the gains.
As per a leading financial daily, the governing council of National Investment and Infrastructure Fund (NIIF) chaired by finance minister Arun Jaitley recently reviewed the progress of India's maiden sovereign wealth fund NIIF. The panel has also discussed investment proposals and project pipeline in a bid to speed up development of the infrastructure sector.
The council reviewed the follow-up action being taken on the MoUs (memorandum of understanding) signed with Rusnano of Russia, ADIA of Abu Dhabi and the Qatar Investment Authority. They also discussed the guidelines for investment of the corpus of NIIF, including the investment policy. It was noted that public sector companies are also expected to invest in the initial corpus of the Fund.
To give a fillip to the creaky infrastructure in India, the government in its last budget had announced the creation of the National Investment and Infrastructure Fund (NIIF). This was proposed to be established as an alternative investment fund to provide long tenor capital for infrastructure projects. The initiative is in order to fast-track the mega projects under hold and to bolster the economic growth. It aims at infrastructure developments in viable projects, including stalled projects, mainly in the core infra sector. The government holds 49% in the NIIF, while the rest will be held by private investors.
NIIF is a step in the right direction. While the plan may have been laid in a proper manner, it is its execution that will be the key to its success.
Stocks in the automobile space have opened the day on a mixed note with Escorts and Ashok Leyland leading the gains. In another news update, Tata Motors has reported a 10.3% YoY (year-on-year) increase in its global sales, including that of Jaguar Land Rover (JLR) during the month of May.
Global sales for its passenger vehicles category stood up by 9.7% YoY during the last month. Total commercial vehicles sales during last month stood higher by 11.4% YoY.
Further, sales of luxury brand JLR increased by 18.8% YoY. This was recorded as the company's fifth consecutive record-breaking month.
Tata Motors is India's largest automobile company. In its results for the quarter ended March 2016, the company's consolidated revenues grew by 18.8% YoY to Rs 799.2 billion. The healthy growth was on the back of the strong performance of its Jaguar Land Rover (JLR) unit. The consolidated net profits of the company grew by 201% to Rs 51.7 billion during the quarter.
Moreover, the Indian operations too reported a profit of Rs 4.6 billion as compared to a net loss of Rs 11.6 billion a year ago. The Indian operations improved on the back of strong performance from the medium and heavy duty trucks.
Going forward, the traction from the newly launched model in passenger vehicle space such as 'Tiago' and a pick -up in the economic activity to boost the demand for commercial vehicles will be the key thing to watch out for pertaining to Indian operations. As far as the JLR unit is concerned, the demand from key geographies such as China and Europe will need to be closely tracked to assess its impact on its financial performance going forward.
The stock of Tata Motors has opened the day down by 0.6% on the BSE.
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