Global Stock Market Drivers, August Automobile Sales, and Top Buzzing Stocks Today

Wed, 2 Sep Pre-Open

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On Tuesday, Indian share markets witnessed volatile trading activity throughout the day and ended higher.

At the closing bell on Tuesday, the BSE Sensex stood higher by 273 points. Meanwhile, the NSE Nifty stood higher by 83 points.

Bharti Airtel and Tata Steel were among the top gainers.

The BSE Mid Cap index ended up by 1.2%. The BSE Small Cap index ended up by 0.5%.

Sectoral indices ended on a mixed note with stocks in the telecom sector and metal sector witnessing buying interest.

Meanwhile, IT stocks witnessed selling pressure.

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Top Stocks in Focus Today

Larsen & Toubro (L&T) will be among the top buzzing stocks today as the company has announced the closure of the strategic divestment of its Electrical and Automation business to Schneider Electric for Rs 140 billion in an all-cash deal.

L&T said it will use the proceeds to capital allocation decisions from a long-term perspective.

Biocon share price will also be in focus today as the company's subsidiary Biocon Biologics India and its partner Mylan N.V. launched insulin glargine injection under the brand Semglee in the US market.

Market participants will also track Vodafone Idea share price and Bharti Airtel share price. The Supreme Court yesterday ruled that telecom companies will be allowed 10 years for staggered payment of AGR dues.

The apex court said the 10-year payment timeline will begin from April 1, 2021. Moreover, the telecom companies will have to pay 10% of the dues by March 31, 2021.

August Manufacturing Activity

Manufacturing activity in India grew in August for the first time in five months led by a rebound in domestic demand as lockdown restrictions eased, though firms continued to cut jobs, a private survey showed on Tuesday.

The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose to 52 in August from 46 in July, above the 50-level reading that separates growth from contraction.

Official data released Monday showed that India's gross domestic product (GDP) contracted 23.9% in the June quarter from a year ago because of the Covid-19 pandemic and the lockdown that followed. Manufacturing shrank 39.3% in the quarter.

As per the survey report, for the first time since March, output expanded in the Indian manufacturing sector in August. Production growth was largely driven by greater client demand for Indian goods following the resumption of business operations.

Meanwhile, employment continued to fall despite signs of capacity pressures, as firms struggled to find suitable workers.

Automobile Sales Show Signs of Recovery

Escorts reported a strong 80.1% year-on-year (YoY) jump in tractor sales in the month of August 2020.

The company's Agri Machinery Segment (EAM) sold 7,268 tractors, its highest-ever August sales. It had sold 4,035 tractors in August 2019. On month-on-month (MoM) basis, the volume was up 36.6%.

The company said that market sentiment continues to be highly positive with good monsoons, better Kharif sowing, crop prices holding up well and good supply of retail finance.

Escorts reported 79.4% YoY growth in domestic tractor sales in August 2020 at 6,750 tractors against 3,763 tractors in August 2019.

The export tractor sales in August 2020 were up 90.4% YoY at 518 tractors against 272 tractors sold in August 2019.

Meanwhile, Maruti Suzuki reported a 21.7% YoY growth in domestic wholesales for August to 1,15,325 units.

The country's largest passenger vehicle manufacturer had sold 94,728 units in the year-ago period.

Factory dispatches also improved from July, when the company had sold 100,000 units while sales in June numbered 51,274 units. Maruti resumed production at its Manesar plant from May 12, with dispatches at 13,865 units for that month.

Hatchback sales grew 26.8% YoY to 81,665 units in August, while those of utility vehicles rose 13.5% to 21,030 units.

Exports, however, fell 15.3% to 7,930 units during August.

Hyundai Motor India Limited (HMIL) announced that its domestic sales increased 19.9% at 45,809 units in August 2020 as against 38,205 units in the same period last year.

However, export sales for the automaker declined 61.7% at 6,800 units in the last month as compared to 17,800 units in August 2019.

Global Stock Market Drivers

Global markets started September on a positive note, with indexes close to all-time highs and Europe edging higher, pushed up by Chinese factory data that showed a rebound in demand.

Factory activity in China expanded at the fastest rate in nearly a decade in August, a private PMI survey showed on Tuesday, contrasting with an official survey on Monday that showed output in the country's factories grew slightly more slowly last month as floods hit the southwest.

PMI data from across Europe showed manufacturing activity generally on the path to recovery though factory managers are wary about investing and hiring more workers.

In Germany, Europe's largest economy, output grew at its fastest pace since February 2018, while in France it contracted.

On the commodities front, crude oil prices gained on Tuesday, reversing overnight losses, as investors moved into risk assets and stayed away from the safe-haven US dollar which hit multi-year lows.

Gold prices rose to their highest level in nearly two weeks, as the dollar slipped to multi-year lows on bets that US interest rates would stay lower for a longer period after the Federal Reserve's new policy framework.

The Fed's new monetary policy strategy, which could result in inflation moving slightly higher and interest rates staying lower for longer, has triggered a sell-off in the dollar, driving inflows into safe-haven bullion.

As per the economic schedule, here are the key events due later today:

• Germany - Retail Sales - July
• Australia - GDP - Q2
• US - Crude Inventories and Factory Orders

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

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