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Sensex Trades in Green; Telecom and IT Stocks Lead
Thu, 8 Aug 12:30 pm

Stock markets in India are presently trading on a positive note. The BSE Sensex is trading up by 116 points and the NSE Nifty is trading up by 24 points. Meanwhile, the BSE Mid Cap index is trading down by 0.3% while the BSE Small Cap index is trading flat.

Among the sectoral indices, telecom stocks and information technology stocks are witnessing maximum buying interest. Consumer durables stocks and bank stocks are trading in red.

In the news from the automobiles sector. As per an article in a leading financial daily, Maruti Suzuki India cut its production in July by 25.2%, making it the sixth month in a row that the country's largest carmaker reduced its output.

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The company produced a total of 1.3 lakh units in July, compared with 1.8 lakh units in the year-ago month. Passenger vehicles' production last month stood at 1.3 lakh units as against 1.7 lakh units in July 2018, a decline of 25.6%.

Production of mini and compact segment cars, including Alto, New WagonR, Celerio, Ignis, Swift, Baleno, Dzire, stood at 95,733 units as against 1.3 lakh units in July last year, down 25%.

Utility vehicles such as Gypsy, Vitara Brezza, Ertiga and S-Cross saw reduced production at 19,464 units as against 24,718 units in the year-ago month, down 21.3%.

Mid-sized sedan Ciaz saw its production reduced to 3,497 units in July from 7,115 units in the same month last year.

Light commercial vehicle Super Carry production was also trimmed to 2,724 units last month from 3,077 units in July 2018.

Maruti Suzuki share price was trading down by 0.1% at the time of writing.

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Notably, the Indian auto sector is in the middle of a storm.

Passenger sales fell 20.5% in May 2019 compared to May 2018. This follows a 17.1% year on year decline in April as well.

Never Ending Woes For The Automobile Sector

Never Ending Woes For The Automobile Sector

The decline in May is the worst seen since 2001.

Multiple factors have affected the auto sector of late.

The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms... they have all taken their toll.

Also, this sector is ripe for disruption with electric vehicles and ride sharing applications.

Maruti Suzuki announced it would stop making diesel cars from April next year.

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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.

Only the ones adapting their business models to the rapidly changing environment will survive and thrive.

Moving on to the news from the steel sector. Tata Steel has reported 33.6% fall in its net profit at Rs 15.4 billion for the first quarter ended June 30 as compared to Rs 23.2 billion for the same quarter in the previous year.

Total income of the company decreased by 3.8% at Rs 162.7 billion for Q1FY20 as compared Rs 169.1 billion for the corresponding quarter previous year.

On the consolidated basis, the company has reported a fall of 63.7% in its net profit at Rs 7 billion for the quarter under review as compared to Rs 19.3 billion for the same quarter in the previous year.

However, total income of the company increased marginally by 1% at Rs 362 billion for Q1FY20 as compared Rs 358.5 billion for the corresponding quarter previous year.

Poor industrial sentiment overseas and with Tata Steel recently announcing its failure to sell its European assets weighed down on earnings.

On Tuesday, Tata Steel said it had abandoned plans to sell its Southeast Asian assets to China's HBIS group. On Wednesday, the company said it has executed a memorandum of understanding to divest 70% of its stake in Tata Steel Thailand to Synergy Metals and Mining Fund, a Dubai-based private equity fund.

At the time of writing, Tata Steel share price was trading down by 3.7%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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