Morning update for 17 December 2020

Indices at 9:30 am

Nifty50 13,692 ▲ 9 (+0.0%)    

Sensex 46,690 ▲ 23 (+0.0%)  

Nifty Bank 30,671 ▼ 27. (-0.0%) 

In the news

Headwinds ahead for auto ancillaries

• The Automotive Component Manufacturers Association (ACMA) believes that auto ancillary companies could take 3-4 years to return to growth. 
• The industry is set for a double-digit contraction this year after witnessing a 34% fall in the first half, with Q1 revenues being near zero. While signs of recovery are visible, the industry faces headwinds from high raw material costs and supply chain issues. 

Textile and apparel stocks in demand

• High investor interest was seen in the stocks of home textile (makers of products like bedsheets, curtains, etc) and apparel stocks, recently. Higher in-home consumption due to the increased stay-at-home period is helping demand recovery.
• Further, export order flows have improved from Q2 due to the reopening of departmental stores and pent-up demand. Yesterday, shares of Page Industries (+5.1%), TCNS clothing (+10.3%), Dollar Industries (+7.3%), Himatsingka Seide (+10.0%), Bombay Dyeing (+7.4%), and Gokaldas Exports (+15.4%) were all up.

Hero two-wheelers to get costlier

• After Maruti and M&M, two-wheeler major Hero MotoCorp has announced price hikes from 1 January to partially offset the rising commodity prices. The company aims to increase prices by up to ₹1,500 across its models. 
• Other players are likely to follow suit soon. The concern is that if the commodity prices rise unabated, automakers may further hike prices which eventually could impact demand.

US Fed raises GDP forecast

• India is not the only country to see an upward revision in its GDP forecast. The Fed expects the US GDP to contract by just 2.4% in 2020, versus the 3.7% fall predicted earlier. 
• For 2021, it expects the GDP to grow at 4.2%, probably the highest in the last 20 years. Further, the Fed has kept the interest rates unchanged at 0.25%. 

Events this week

• Thursday: Initial jobless claims (US)

Sectoral indices

Fact of the day

Blue whales can eat half a million calories in one mouthful. 

Source: National Geographic

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