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Major Asian stock markets have opened the day on a positive note with stock markets in China and Japan trading higher by 1.9% and 0.9% respectively. Major indices in Europe and US ended their previous session in red. The rupee is trading at 68.49 per US$.
Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading higher by 21 points (up 0.09%) and NSE Nifty is trading higher by 7 points (up 0.09%). Both, BSE Mid Cap and BSE Small Cap are trading higher by 0.3% and 0.4% respectively. Sectoral indices have opened the day on a positive note with stocks from capital goods and telecommunication sectors witnessing maximum buying interest.
As reported in a leading financial daily, World Metrological Organization (WMO) has stated that El Nino is in retreat. El Nino is a weather phenomenon which causes huge changes to the climate patterns.
One of the reasons for deficit rainfall in India in the preceding two years was the occurrence of El Nino. Reportedly, India witnessed a 14% rainfall deficit in the south-west monsoon after which 10 states officially declared a drought. The south-west monsoon accounts for 70% of the annual rainfall in the country. If the data projected by WMO is to be believed, India maybe set to break the run of poor monsoons. Further, monsoon forecast by Indian Metrological Department (IMD) is expected in the month of April.
Deficit rainfall leads to low disposable income in the hands of the rural people and thus imapacts their consumption. This has led to flat sales reported by the companies in the FMCG space. Further, companies in the motorcycle and tractors space too have been impacted. A pickup in the rural consumption will have a significant impact on the financials of the companies which banks on rural demand for their growth prospects wherein nearly 70% of the overall population resides.
As reported in leading financial daily, local manufacturers of truck and bus radials (TBR) are cutting prices and introducing tyres without warranty. The prime reasons for taking a price cut is on account of cheap imports from China. The Chinese tyres are flooding the Indian markets, leaving domestic players with increasing levels of unutilized capacities.
Reportedly, TBR imports have more than doubled from 490,601 units in 2013-14 to 1,308,437 units in 2014-15. In order to tackle this problem many domestic manufacturers have already launched the low cost TBRs which are sold without warranty just like the Chines tyres. However, despite recent price cuts, tyre prices of incumbents in the TBR space are still 20-25% more than their Chinese competitors.
Going forward, finance ministries direction to impose Anti-dumping measures in this segment would be an important factor to watch out for.
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