Sensex Ends 463 Points Lower; Metal and Telecom Stocks Witness Huge Selling

Thu, 1 Aug Closing

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Indian share markets fell sharply today, before staging late recovery during closing hours. The BSE Sensex fell over 750 points intraday and breached the 37,000 mark. Meanwhile, NSE Nifty slumped below 10,900.

Barring energy sector and consumer durables sector, all sectoral indices ended on a negative note with metal stocks, telecom stocks and IT stocks, leading the losses.

At the closing bell, the BSE Sensex stood lower by 463 points (down 1.2%) and the NSE Nifty closed down by 105 points (down 1.2%). The BSE Mid Cap index ended the day down 0.9%, while the BSE Small Cap index ended the day down by 1.1%.

Asian stock markets were also weak today after the US Federal Reserve lowered interest rates by 25 basis points. As of the most recent closing prices, the Hang Seng was down by 0.7% and the Shanghai Composite stood lower by 0.8%.

In news from the IT sector, Wipro share price was in focus today. Stock of the company gained 4% intraday in early trade today after markets regulator approved share buyback proposal.

Following the approval, the company said it would dispatch the letter of offer for the buyback to eligible shareholders appearing on the record date of June 21, 2019, on or before August 6, 2019.

The buyback will open on August 14, 2019 and close on August 28, 2019. The last date for settlement of bids on the stock exchange is September 9, 2019.

Earlier in April, the company had approved a buyback for up to 323 million shares at Rs 325 per share totaling up to Rs 105 billion.

Note that this is the third buyback by Wipro. The IT major had last conducted a Rs 110 billion share buyback in November 2017 and Rs 25 billion worth of shares buyback in 2016.

As per regulatory norms, a company can buy back its shares only once in 12 months. A company is not allowed to make any offer of buyback within a period of one year reckoned from the date of expiry of buyback period of the preceding buyback offer if any, as per rules.

To know more about the company, you can read Wipro's Q1FY20 result analysis and Wipro's 2018-19 Annual report analysis on our website.

Moving on to news from the automobile sector, country's largest carmaker Maruti Suzuki reported 36.2% decline in passenger vehicle sales in the domestic market at 98,210 units for July.

While sales of mini cars Alto and old WagonR dropped 69.3% to 11,577 units, those of compacts (Swift, Dzire, Baleno, Ignis, Celerio and new WagonR) fell 22.7% to 57,512 units.

Sales for Vistara Brezza, Ertiga, S-Cross dropped 38.1% to 15,178 units and vans by 37.9% to 9,814 units. Sales of light commercial vehicle Super Carry stood flat at 1,732 units during the month.

Total sales declined 33.5% at 1,09,264 units in July. The company had sold 1,64,369 in July last year.

Exports in July were down by 9.4% at 9,258 units as against 10,219 units in the corresponding month last year.

Meanwhile, Bajaj Auto registered a fall of 5% in total sales to 381,530 units in July 2019 against 400,343 units in July 2018.

Motorcycle sales decreased by 3% and stood at 322,210 units in July 2019 against 332,680 units in July 2018.

The company reported 12% fall in commercial vehicles sales, which stood at 59,320 units as compared to 67,663 units in month of July 2018.

However, the company's total exports stood at 176,060 units, registering a gain of 8% as compared to 162,832 units sold in the corresponding month last year.

Maruti Suzuki share price and Bajaj Auto share price ended the day up by 2% and 0.9%, respectively.

Automobile sales have fallen every month for almost a year now, except for October when the numbers were flat. In June, nine out of India's 11 main passenger vehicle makers reported a double-digit decline in sales.

Reports state that many dealers who have recently entered the auto industry are finding it difficult to manage their repayment obligations. Banking industry experts estimate the total outstanding loans to automobile dealers to be in the range of Rs 700-800 billion.

However, it is interesting to note that despite the slowdown in the auto sector, the sales volume of electric vehicles (EVs) are growing at a robust pace.

Have a look at the chart below:

Electric Vehicle Sales on a High Growth Trajectory!

Electric-2 wheelers sales volume registered 130% YoY growth in FY19. 4-wheeler EVs grew by 200% YoY.

Similarly, electric three-wheelers reported the highest sales volume of 630,000 units. It is important to note that the electric three-wheeler industry has been growing without government support.

The base is quite low compared to the internal combustion engine (ICE) vehicle sales. However, you cannot ignore the growing momentum in EV sales.

The recently announced government incentives will give a further boost to EV sales. The coming one year will be a real test for India's auto companies.

It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.

Richa Agarwal, editor of Hidden Treasure, believes that the companies which will adapt their business models to the rapidly changing environment will survive and thrive.

In fact, she has picked out 4 Rebound Stocks to profit from the market crash.

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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