Gaining strength

Nifty50: 17,825 ▲ 127 (+0.7%)
Sensex: 59,842 ▲ 379 (+0.6%)

Hello, folks!

What did you do when you were a toddler? Eat, sleep, learn and play, right? However, a three-year-old girl from New Delhi just became India’s youngest Rubik’s cube solver. She solved three-layer, two-way and premix cubes in just 5 minutes, breaking her earlier record of 3 hours!

Anyway, onto the markets, which closed on a positive note. Meanwhile, all’s not well with China’s economy. More on that later.

• Benchmark indices closed higher, amid broad-based optimism in the markets.
• In all, 42 of the Nifty50 stocks closed in the green.
• Markets reacted positively after a drop in retail inflation to a five-month low of 6.71% in July.

Among the Nifty sectoral indices, Auto (+2.5%) and Realty (+1.9%) were the top gainers, whereas PSU Bank (-0.3%) and Media (-0.3%) lost the most.

What’s trending

⭐ Carmakers plan new electric SUVs

M&M (NSE): 1,289 ▲ 29 (+2.3%); TATAMOTORS (NSE): 490 ▲ 12 (+2.7%)

Auto major Mahindra and Mahindra (M&M) unveiled five new electric SUVs on 15 August in the UK. Four of these SUVs are expected to hit the roads between 2024 and 2026. Meanwhile, Tata Motors plans to launch the Avinya, its pure electric car by 2025. Ola Electric also announced on Monday its plans to launch its first pure electric car by 2024. As per a report, India is estimated to reach a production milestone of 600,000 units by 2030.

⭐ Housing prices rise above pre-pandemic levels

DLF (NSE): 378 ▲ 6 (+1.6%), LODHA (NSE): 1,111 ▲ 13 (+1.2%)

As per the new report by industry body Credai, housing prices in India during the April-June quarter surpassed the pre-pandemic levels. Prices increased by 5% across the top eight cities, mainly due to a hike in rates of building materials as well as labour wages. Further, robust housing demand also contributed to the rise in housing prices. Meanwhile, there was a marginal decline in unsold inventory during the period.

⭐ Piramal demerger gets NCLT nod

PEL (NSE): 1,925 ▲ 4.1 (+0.2%)

The National Company Law Tribunal (NCLT) has given its approval for the demerger of Piramal Enterprises’ pharma business. Following the demerger, there will be two listed entities—Piramal Enterprises (which will retain the finance business) and Piramal Pharma. The company said that it is on track to complete the demerger and listing of Piramal Pharma by the third quarter of FY23.

⭐ Apollo Tyres surges on strong Q1 performance

APOLLOTYRE (NSE): 250 ▲ 14 (+5.9%)

Shares of Apollo Tyres hit a five-month high on Tuesday after the tyre maker reported strong Q1 numbers on Friday. The company reported a 49% year-on-year (YoY) jump in its net profit at ₹190.7 crore. The bottomline grew despite higher input costs, aided by a 30% YoY growth in revenue from operations at ₹5,942 crore. The management said that tighter control on costs, improved product mix and timely pricing actions across markets helped the company tide over the spike in raw material prices.

⭐ DFM Foods rallies on delisting plans

DFMFOODS(NSE): 302 ▲ 50 (+19.9%)

Shares of the packaged snack manufacturer DFM Foods were locked in the upper circuit after the company announced its proposal to delist its shares from the stock exchanges. The company’s promoter, AI Global Investments, which holds 73.7% stake said the proposed delisting would provide it full ownership of the company and enable operational flexibility.

In Focus

Is China's economy heading towards a slowdown?

In the past few months, rising inflation and interest rate hikes have been buzzwords in markets across the globe. The rate hike decision taken by the US Federal Reserve and central banks in other developed economies to curb inflation is being closely monitored. 

However, things seem to be different in the Chinese economy, following a surprise rate cut of 0.1% by the People's Bank of China. But why is China taking monetary measures contrary to its global counterparts? Let’s take a closer look. 

China’s central bank lowered its one-year policy rate to 2.75% and the seven-day reverse repo rate to 2% from 2.1% on Monday. The surprise rate cut was done to support the country’s economy, which has been impacted due to repeated Covid-led lockdowns and restrictions.

As a result of these restrictions, key economic indicators like retail sales and industrial output in July fell short of market expectations. Retail sales growth weakened to 2.7% YoY from 3.1% in June. Industrial production grew 3.8% YoY in July, but lower than June’s 3.9%. Meanwhile, property sales contracted by 29% deeper than the 18% fall in June. This was after the Chinese GDP growth slumped to 0.4% in the June quarter, as compared to 4.8% in the March quarter.

The disappointing numbers prompted the central bank to cut rates with the aim of stimulating demand. It’s worth noting that a slowdown in the Chinese economy affects the global economy. China is a major consumer of commodities, especially industrial metals and crude oil. Any decline in demand from China can trigger  a fall in prices of commodities.

This is already visible in the prices of crude oil. Brent crude oil price is down by over 9% this month, mainly due to concern over demand in China, which is the world’s largest crude importer. Meanwhile, prices of key metals like copper and iron ore have also corrected due to weak Chinese demand. 

Is China’s economy headed for a slowdown? We’ll have to wait and watch.

IPO corner

On Day 2, the IPO of electronic components maker Syrma SGS was subscribed 92%. Retail investors continued to show strong interest. The retail portion was oversubscribed more than 1.5 times. Click here to apply for the IPO on Upstox. 

Meanwhile, online insurance provider Digit Insurance has filed its draft papers with the market regulator SEBI for its IPO. The company plans to raise ₹1,250 crore through a fresh issue.

Good to know

What is same store sales growth?

Same store sales growth refers to the rise in sales from the existing stores that were open during a particular period. This helps investors in discounting the impact of new store openings on a company’s revenue. It also reveals the management’s effectiveness in increasing sales from the existing assets. Investors look at this metric as it is important to know whether the rise in revenue is taking place from existing locations or because of new store additions.

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