Rally continues

Nifty50: 18,593 ▲ 59 (+0.3%)
Sensex: 62,787 ▲ 240 (+0.3%)

Namaste, friends !

We've all heard of black-swan events, which refer to occurrences that were previously thought to be improbable. But have you heard of a white-panda event? Well, that's what happened in China recently. An all-white panda was spotted strolling through the Wolong National Nature Reserve in China.  It is thought to be the world's first and only white panda!

Speaking of black and white, the markets thankfully closed in the green today.

• After a strong opening, markets closed higher supported by positive global cues
• In all, 25 of the Nifty50 stocks closed in the green
• Traders await the outcome of the RBI’s Monetary Policy meeting, which starts tomorrow

Among the Nifty sectoral indices, Auto (+1.2%) and Media (+0.8%) were the top gainers, while FMCG (-0.4%) and PSU Bank (-0.4%) were the top losers.

What’s trending

⭐Tata Motors scales new high

Shares of Tata Motors hit a new 52-week high on Monday after Tata Group signed an agreement with the Gujarat state government to set up a giga-factory for manufacturing lithium-ion cells with an initial investment of ₹13,000 crore. Tata Motors, which has the highest market share in the electric vehicle space, could benefit from this new lithium-ion plant.   

⭐ Wonderla gains after tax waivers  

Shares of Wonderla Holidays rose by over 5% intraday after the Tamil Nadu government waived off Local Body Tax (LBT) for the company. The company said a waiver of 10% LBT for a period of 10 years from the commencement of commercial operations has been granted. It expects to commence the operations of the Chennai project at the earliest.

⭐HG Infra bags new order 

The infrastructure company has secured a new order worth ₹655 crore from North Central Railway. The project work involves redevelopment of Kanpur Central railway station to be completed in 36 months. As of Q4FY23, the company had an order book of ₹12,766 crore.

⭐ Crude oil gains further 

International crude oil prices witnessed a sharp rise today. This comes after major exporter Saudi Arabia plans to cut its oil production by 1 million barrels per day (bpd) from July 2023. Meanwhile, over the weekend OPEC and its allies agreed to extend their existing oil supply cuts of 3.66 million bpd by one year, i.e. till the end of 2024.

In Focus

Auto stocks gains traction 

The Nifty Auto index gained more than 1% on Monday, touching a new 52-week high. So far this year, the Nifty Auto index is already up over 15%. What are the key reasons behind this rally? Let’s find out. 

Robust monthly sales 

Automakers are scaling new highs on the back of strong sales volume. In May 2023, the overall retail sales rose by over 10% YoY to 20.1 lakh vehicles. Except for light commercial vehicles (LCVs), all other categories reported positive sales growth, as per retail data released by Federation of Automobile Dealers Associations (FADA). 

Besides this, the Q4 FY23 earnings season was fairly good for auto companies. India’s largest automaker, Maruti Suzuki reported a 43% YoY jump in net profit to ₹2,671 crore, while Tata Motors returned to profitability from loss, reporting net profit of ₹5,496 crore. 

Improving fundamentals

Recovery in rural demand, especially in case of two-wheelers and high purchases during the ongoing wedding season has also boosted positive movement in automotive stocks.    

Another key factor is the easing of commodity prices, especially the fall in the price of steel in the local market. In May 2023, steel prices were around ₹57,000 per tonne, down over 17% YoY, mainly due to higher exports from China. Fall in prices of key raw materials is positive for the automobile industry. 

Furthermore, most automakers have reported improvement in production-related issues, especially those related to the shortage of semiconductor chips.   

With multiple factors in its favour, India’s auto industry is in top gear at the moment.

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