In a bear hug

Nifty50: 17,303 ▼ 88 (-0.5%)
Sensex: 58,962 ▼ 326 (-0.5%)

Dear Reader

A temple in Kerala’s Thrissur has got a very special elephant. All the features of Irinjadapilly Raman are similar to an elephant, but it is actually a robot!

This life-like mechanical jumbo has been gifted to the temple by PETA India. The aim is to replace real elephants in rituals and festivals. 

Now, moving on to the markets, where the bears seem to be in no mood to show any mercy.

• The markets declined for the eighth consecutive day.
• Of the Nifty50 universe, 33 stocks closed in the red.
• Meanwhile, India’s GDP growth slowed down to 4.4% in the December quarter.

Among the Nifty sectoral indices, Media (+2.4%) and Realty (+1.1%) were the top gainers, while Oil & Gas (-1.3%) and Pharma (-1.3%) were the top losers.

What’s trending

⭐ Shree Cement wins coal block

The cement maker (+0.5%) has emerged as the highest bidder for Datima coal mine in Chhattisgarh. The mine has estimated coal reserves of 13.3 million tonnes. The company participated in the coal auction with an aim to create long term fuel supply for its operations.

⭐ Brigade Enterprises to expand business  

The property developer (+0.8%) has announced expansion plans for its managed office space business. It operates this segment under the brand name BuzzWorks. The company intends to double the number of seats in its flexible office space. It currently has 2,400 seats with 99.5% occupancy across different BuzzWorks locations.

⭐ Zee Entertainment jump as F&O ban revoked  

Shares of the media company (+6.2%) rose after the NSE withdrew its decision to exclude the company's stock from the futures and options segment. The move comes after the National Company Law Appellate Tribunal (NCLAT) granted interim relief to the company and stayed the bankruptcy proceedings against it. 

⭐ NHPC rises after government approval 

The state-owned hydropower producer (+3.5%) has received government nod for expenditure of ₹1,600 crore (for pre-investment activities and clearances) for the implementation of Dibang Multipurpose Project in Arunachal Pradesh. The project, which has an estimated cost of ₹31,876 crore, is being developed by NHPC and will generate 2880 MW of power. 

In Focus

Why are foreign investors riding on auto stocks?

Foreign investors have been trimming their overall investments in Indian equities in 2023. But, they seem to have a favourite – the automotive sector. Since 15 January 2023, they have bought auto stocks worth more than ₹3,000 crore.

Let’s understand the reasons behind this: 

1. Robust demand

Dealerships across the country have been witnessing a surge in footfalls post the pandemic. The demand for passenger vehicles (especially SUVs, big cars, and multi-purpose vehicles) has been surging, according to experts. The management of Maruti Suzuki – India’s biggest passenger vehicle (PV) maker –  said that in January, the bookings and inquiries were up 17-18% year-on-year. 

2. Strong order book

This robust demand has translated into a strong order book for auto companies. In the December quarter, Maruti Suzuki’s customer orders stood at about 363,000 vehicles. Of this, about 119,000 orders were for newly launched models. 

More importantly, there is a demand for upper-end vehicles, which provides a boost to revenue and profitability. Tata Motors’ management highlighted that its three most profitable models – the New Range Rover, New Range Rover Sport and Defender – account for over 74% of Jaguar Land Rover’s order book.

3. Price rise

The rising demand has also given wriggle room for auto companies to increase prices. Maruti Suzuki and Tata Motors have hiked prices of some of their models, leading to higher realisation (revenue per vehicle). This, coupled with the softening of raw material prices, has improved margins or profitability.

4. EV traction

Meanwhile, electric vehicles (EV) have continued to gain traction, despite the relatively higher initial costs. Experts observed that all scooter launches in the EV segment are receiving strong demand. The robust demand in EV space is because customers are willing to incur higher acquisition costs rather than recurring expenses like rising fuel prices. 

All these factors seem to be keeping the auto sector in the fast lane and attracting foreign investors.

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