Maruti cuts production, sugar stocks get a boost & more

Nifty50: 16,614 ▲51 (+0.3%)
Sensex: 55,792 ▲209 (+0.3%)

The markets witnessed weakness for most of the trading session. However, the benchmark indices rose in the last hour of trade, closing at an all-time high. The market breadth was evenly split, with 26 of the Nifty50 stocks posting gains. 

Among the Nifty sectoral indices, IT (+2.5%) made the strongest gains, while Metal (-2.3%) and PSU Bank (-1.7%) were the weakest. 

Here are the top stories of the day.

Maruti cuts production amid chip shortage

As per reports, the country’s largest carmaker is likely to cut its August production by 30-40% owing to the current semiconductor shortage. This translates to 50,000–60,000 less units produced or a drop of ₹2,500–3,000 crore in revenue. 

The semiconductor shortage had already hit production at Maruti’s plant in Gujarat this month. The shortage has now affected its production at the Manesar plant, too. While shares of Maruti closed 0.9% higher today, they have fallen over 8% since the start of the current quarter.

Spicejet hives off logistics business

The budget airline announced that it will transfer its cargo and logistics operations into its subsidiary, SpiceXpress. As per the company, the transfer will allow the new company to grow its logistics business and raise capital independent of Spicejet. 

The logistics business is valued at ₹2,555 crore. Spicejet’s management has stated that the hiving off will help the business unlock significant value for Spicejet’s investors. The airline’s stock gained nearly 5% today. 

Sugar stocks get a boost

In a letter to the prime minister’s office, the Indian Sugar Mills Association (ISMA) has requested to immediately raise the minimum support price of sugar by ₹3–4 per kg to ₹34–35 per kg. The price hike could fetch sugar mills about ₹4,800 crore of additional working capital for their current stocks and around ₹9,200 crore in the next season. 

The additional cash flows can be used by the sugar industry to clear the cane price arrears of the farmers. Stocks sugar manufacturers such as Balrampur Chini, Dhampur Sugar and Dalmia Bharat gained 2–4.5% today. 

Closing bell

Backed by strength in IT and FMCG stocks, the benchmark indices scaled new heights. It was the fourth day of consecutive gains for the markets. The Nifty Midcap 100 index, which has been under pressure for sometime now, also showed signs of revival and closed 0.3% higher. There are no major data releases this week and stocks are expected to follow general news flow. Further, this Thursday being a market holiday, the weekly derivatives expiry will happen tomorrow. This could lead to higher volatility. 

Good to know

What is paid-up capital?
Paid-up capital refers to the money that a company receives after selling its shares. For instance, if a company issues 200 shares at ₹10 per share, then its paid-up capital would be ₹2,000. These shares are fully paid and there is no amount pending to be received from the shareholders, unlike in the case of partly paid shares. Further, paid-up capital may be less than or equal to authorised share capital, which is the maximum amount of capital for which shares can be issued by a company.  

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Investment in securities markets is subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by RKSV group. Investors should consult their investment advisor before making any investment decision.