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Sensex Opens Flat; Realty & Consumer Durables Stocks Gain
Thu, 14 Dec 09:30 am | Rini Mehta, TM Team

Asian indices are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.14% while the Hang Seng is down 0.07%. The Shanghai Composite is trading down by 0.2%. Overnight, the US markets closed mixed.

Back home, India share markets have opened the day marginally higher. The BSE Sensex is trading higher by 33 points while the NSE Nifty is trading higher by 9 points. The BSE Mid Cap index and BSE Small Cap index opened the day up by 0.4% & 0.3% respectively.

Barring FMCG stocks and bank stocks, all sectoral indices have opened the day in green with realty stocks and consumer durables stocks witnessing buying interest. The rupee is trading at 64.45 to the US$.

As per the data published by the Reserve Bank of India (RBI), India's July-September current account deficit more than doubled from a year earlier after imports accelerated while crude prices surged.

The July-September current account deficit (CAD) widened to 1.2% of gross domestic product, or US$7.2 billion. That was wider than the 0.6% or US$3.4 billion in the same period a year ago.

Meanwhile, the trade deficit widened to US$32.8 billion in the previous quarter from US$25.6 billion a year ago.

Reportedly, the widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit brought about by a larger increase in merchandise imports relative to exports.

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Going ahead the current account deficit is expected to widen and end the fiscal year ending in March at 1.7-2.0% of GDP, as oil and other global commodity prices continue to gain, while exports remain stable.

Despite a wider current account deficit, India's balance of payments posted a surplus of US$9.5 billion in July-September compared with US$8.5 billion a year ago, helped by a stronger capital account.

The capital account surplus, which includes foreign direct investment and portfolio inflows, was at US$6.9 billion in the September quarter compared with US$4.3 billion a year ago.

Moving on to the news from the automobile sector. As per an article in a leading financial daily, Maruti Suzuki India (MSI) plans to increase prices across its models by up to 2% from January in order to partially offset rise in input costs.

The company currently sells a range of models, from hatchback Alto 800 with price starting at Rs 0.2 million to crossover S-Cross priced at Rs 1.1 million (all prices ex- showroom Delhi).

Reportedly, the company is revising prices as there has been a gradual increase in commodity prices over the past few months.

According to the company, the raised cost of equipments, parts, fuel, transportation and processing are the major reasons that compelled the company to decide in favour of the price hike.

It is pertinent to mention here that the company utilizes 95% manufacturing parts through its ancillaries while only 5% are imported components.

The quantum of price increase will vary based on the different models and fuel specifications.

Earlier, Tata Motors had said that it will increase the prices of its entire passenger vehicle range by up to Rs 25,000, starting from January to offset the impact of rising input costs.

Another automobile manufacturer Ford India said that it will increase the prices of all its vehicles by up to 4% from 1 January 2018.

Speaking of automobile industry in India, S&P BSE Auto index is the best performing sectoral index since the global financial crisis. Auto index has surged by a mammoth 823% since November 2008. This is way ahead as compared to the benchmark index returns of 230% during the same period.

Within the auto index, Tata Motor's stock has appreciated the most since November 2008. The stock has posted a gain of 1180% since November 2008. Other stocks too such as Maruti Suzuki, Bajaj Auto, Mahindra and Mahindra have gained more than 1000% since then.

BSE Auto Index Witnessed the Highest Gains Since Financial Crisis

The main reason leading to this surge is the booming consumption story. Driving aspirations of the rising middle class have pushed up car sales in the world's second most populous country. Further, benign interest rates and lower oil prices too have supported this consumption boom.

Having said that, valuation too plays a big part in the trajectory of the stock prices and currently the valuations of the auto majors appears to be a bit stretched. Past performance is no validity of the stocks performing well going ahead and hence investors should pay utmost heed to the valuation before investing in the auto majors.

Maruti Suzuki share price opened the day down by 0.1%.

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Stock Market Updates

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GRINDWELL NORTON share price is trading up by 8% and its current market price is Rs 1,259. The BSE CAPITAL GOODS is up by 0.4%. The top gainers in the BSE CAPITAL GOODS Index is GRINDWELL NORTON (up 7.7%). The top losers are L&T (down 0.3%) and V GUARD INDUSTRIES (down 0.4%).

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