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Indian Indices Open Flat
Mon, 29 Aug 09:30 am

Barring Japan, major Asian stock markets have opened the day on a negative note with the stock market in Indonesia is trading lower by 1%.

Benchmark indices in Europe ended their previous session in green with stock markets in France, ending the day higher by 0.8%. While, stock market in the US ended the day lower by 0.4% post Jane Yellen's speech indicating a rate hike in the month of December.

The rupee is trading at 67.05 per US$.

Indian stock markets have opened the day on a negative note. The BSE Sensex is trading marginally lower by 20 points (down 0.1%) and the NSE Nifty is trading lower by 7 points (down 0.1%). Both, BSE Mid Cap and BSE Small Cap are trading marginally higher by 0.1% and 0.2% respectively.

Stocks from consumer durables and automobile sector are witnessing maximum buying interest.

As per an article in Livemint, Tata Motor's subsidiary Jaguar Land Rover's (JLR) profit after tax on a consolidated basis fell by as much as 57% during the quarter ended June. This revived some of the fears that Tata Motors would be the worst hit Indian company on account of the impact of Britain leaving the European Union.

However, the impact of Brexit on the quarterly result was a one-off and is not going to significantly impact the financials in the coming quarters. The profits fell mainly on the back of a steep depreciation in pound, which led to foreign exchange fluctuation losses.

Reportedly, the pound had depreciated sharply post-Brexit, resulting in losses on derivatives contracts used by the company to hedge its exposure to other currencies. Besides, the restatement of assets and liabilities as on 30 June also led to forex losses worth 84 Million Euros. However, this was a one-off and is not expected to occur henceforth.

In fact, depreciation of the pound will work in favour of the company going forward as it exports 80% of its vehicles outside the UK. It does import 40% of its components, on which it will take a hit on the forex front-but on a net basis, it will gain from a weak pound.

Further, a transition to Indian-AS too impacted the profits adversely. The positives from the declared results were that the new JLR models are gaining traction in the market. The F-Pace model launched earlier this year has a waiting period of three to four months and accounted for 40% of total Jaguar sales during the quarter. The recently launched Evoque Convertible too has created some excitement in the market.

The performance of JLR coupled with the traction from new models such as Tiago and other upcoming launches will be the key things to watch out for going forward.

In another news update, cement prices have fallen in almost all parts of the country except the southern region in the on-going quarter. Usually, this quarter is seasonally weak on account of a halt in the construction activity due to the monsoon season.

However, the good part is that the prices have not fallen as steeply as it did in the same quarter in the previous year. Though, the worrying part is that the volume off-takes have still not improved. Despite the government's efforts to push infrastructure and allied activities, the impact of these measures is yet to be felt on the ground level.

Provided, the off-takes do not pick up in the second half of the fiscal year the cement prices could possibly move further southwards which could possibly impact the financials of the cement companies.

A pick-up in the construction of real-estate activities and road projects would be the key things to watch out for going forward.

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