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Sensex Opens Marginally Higher; Tata Steel up 3.2% Ahead of Q1 Numbers
Mon, 7 Aug 09:30 am

Asian stocks markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.63% while the Hang Seng is up 0.33%. The Shanghai Composite is trading marginally lower. Stock markets in Europe and US closed their previous session on a positive note.

Meanwhile, Indian share markets too have opened the day marginally higher. BSE Sensex is trading higher by 41 points and NSE Nifty is trading higher by 12 points. S&P BSE Mid Cap and S&P BSE Small Cap are trading up by 0.5% and 0.6% respectively.

Sectoral indices are trading on a mixed note with metal stocks and realty stocks leading the gains. Software stocks and FMCG stocks are trading in red. The rupee is trading at Rs 63.71 against the US$.

Tata Steel share price opened the day up by 3.2% ahead of the company's quarterly results to be announced later in the day. As per the street estimates, Tata steel is expected to see strong earnings on year-on-year basis but sequentially numbers may be weak.

Sale of investment in Tata Motors will aid profitability during the quarter. The company sold stake in Tata Motors at a price of Rs 453 per share to Tata Sons and that will realise income to the tune of Rs 37 billion.

Moving on to news from automobile sector. M&M share price opened the trading day flat after the company posted a 20% decline in June quarter net profit on lower sales of its automobiles, mainly utility vehicles and one-time Goods & Services Tax (GST) transition impact of Rs 1.44 billion.

For the first quarter ended June 30, 2017, M&M reported a net profit of Rs 7.66 billion as against Rs 9.55 billion in the previous year. During the quarter, automobile sales declined by 3.8% while tractor sales rose 13.2%.

In another development, India is the fastest growing market for passenger vehicles (PV) among the top seven car markets. China continues to be the world's biggest auto market by volume.

India Tops Growth in PV Sales

During January - May 2017 period, India's PV sales expanded by 11.3% YoY. This came when the top two markets, China and the US saw a declining trend where volumes declined by 2.6% YoY and 9.8% YoY respectively. India's double-digit growth was led by companies like Maruti Suzuki, Hyundai, Honda and Tata Motors.

The double-digit growth came despite the auto industry witnessing some turbulent time in the last six months as demonetisation put a pause on a great run. Towards the end of fiscal year, a Supreme Court order banning the sale of vehicles that don't conform to Bharat Stage IV emission rules saw some fire sale.

Nevertheless, the blip is expected to be temporary. Reduced vehicle prices post GST, low interest rates, attractive discounts and expectation of good monsoons, will provide support to the industry.

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Aditya Birla Fashion and Retail Ltd share price opened the day up by 1.8% after it was reported that the company is in an advanced stage of talks with American Eagle Outfitters to open standalone outlets of the US fashion brand popular with the youth.

As per an article in The Economic Times, the retail arm of the Aditya Birla Group is looking for the rights to sell the brand both offline and online in India. American Eagle operates around 1,000 stores in the US, Canada, Mexico, the UK, China, Japan and several countries in the Middle East.

Aditya Birla Fashion has also tied up with New York-based department chain Saks Fifth Avenue and plans to roll out the Saks branded outlet, spread over 100,000 sq ft, at Aerocity near New Delhi's international airport.

In news from mining sector, Coal India has decided to halve its offer under e-auction from 300 million tonnes during 2016-17 to around 150 million tonnes this year. This is expected to increase supply to fuel starved power plants.

Last year, the company had managed to sell barely 100 million tonnes of 300 tonnes offered in e-auctions.

Coal India has readied an e-auction calendar that specifies how much coal would be offered subsidiary wise in different months under different modes of e-auction and different modes of transport to non-power and power companies.

Coal India share price opened the trading day up by 0.9% on the BSE.

As per an article in The Hindu Business Line, paint prices have moved up between 5 and 6% since March this year with top manufacturers such as Asian Paints, Berger and Kansai Nerolac increasing product prices.

While market leader Asian Paints hiked prices twice in March and again in May, Berger, the number 2 player and Kansai Nerolac have also initiated similar price hikes, during this period. Reportedly, further price hikes could not be ruled out if cost of materials inch up.

Despite the price rise, margins for paint majors continue to remain under pressure.

For Asian Paints, the operating profit margin saw a sequential decline to 16.78% in June quarter from 17.14% (in the January-March quarter).

Reportedly, Kansai Nerolac saw a minor 18 basis point dip sequentially to 15.79% in Q1FY-18. In case of Berger, OPM declined to around 14.7% in Q1 from 16% in the preceding three-month period.

Paint stocks began the trading day on a mixed note with Asian paints share price and Akzo Nobel share price leading the gains.

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