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Falling exports and oil prices subdue markets

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Falling exports, coupled with a continuous weakness in global crude oil prices and caution over third quarter results, depressed Indian equity markets during the late-afternoon trade session on Monday.

This resulted in a barometer index to recede by 165 points.

Both the bellwether indices of the Indian equity markets even touched their new 52-week low during the intra-day trade.

Disappointing December exports’ data, which touched a 13-month low, absence of fresh triggers and bearish global cues dented sentiments.

Caution prevailed over the upcoming global macro-economic data from China, the UK and the US.

Besides, long-liquidation positions and disappointing macro-data which was released earlier in the week eroded investors’ hopes for an interest rate cut during the upcoming monetary policy review of the central bank.

On Tuesday, the US is expected to release its consumer price index (CPI), while China comes out with its index of industrial production (IIP) and GDP (gross domestic product) data points.

Initially, both the Indian bellwether indices opened on a negative note, following lower closing of the US markets on Friday, when they crashed by 2.39 percent and last week’s steep falls.

However, both indices soon pared their initial losses on the back of positive European markets, expectations of healthy Q3 results and short-covering.

In addition, prices were supported by Prime Minister Narendra Modi’s “Start-Up India Action Plan” which was released on Saturday.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was trading lower by 165 points or 0.67 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading in the red. It was down by 48.20 points or 0.65 percent at 7,389.60 points.

The NSE Nifty again breached the psychological level of 7,500 points during the intra-day trade. It touched a new 52 week low at 7,379.45 points.

The S&P BSE Sensex, which opened at 24,400.78 points, was trading at 24,290.45 points (2.45 p.m.) — down 164.59 points or 0.67 percent from the previous day’s close at 24,455.04 points.

During the intra-day trade the Sensex touched a high of 24,524.85 points and a low of 24,268.60 points — its new low in 52 weeks.

The S&P BSE market breadth favoured the bears — with 2,324 declines and only 335 advances.

“Bearish cues — such as the plunge in exports, lower closing of US markets on Friday, and continuous weakness in oil prices and absence of any fresh triggers pulled-down markets,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told.

“After a lower opening the markets’ recovered on the back of positive European markets and short-covering.”

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PM Modi unveils ‘transparent taxation’, Rights’ Charter for taxpayers

The Income Tax department will adopt a ‘taxpayer charter’ which outlines rights and responsibilities of both tax officers and taxpayers.

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Narendra Modi

New Delhi, Aug 13 : Prime Minister Narendra Modi on Thursday launched the ‘transparent taxation’ platform, which brings into effect faceless assessment of taxpayers, and the Rights’ Charter for the taxpayers.

Also the Income Tax department will adopt a ‘taxpayer charter’ which outlines rights and responsibilities of both tax officers and taxpayers.

Launching the platform ‘Transparent Taxation – Honoring the Honest’, Modi said the department will start faceless appeals from September 25.

“Effort is to make tax system seamless, painless and faceless… Honest taxpayer plays an important role in nation development,” he said.

Asking people to pay taxes due to them, Modi said while it is the responsibility of tax officers to deal with taxpayers with dignity, people should also consider paying taxes as their responsibility.

Fundamental reforms were needed in Indian tax system, he said, adding India is among the nations with lowest corporate tax rates.

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Gold, silver prices now collapse after record run

Futures of silver, which surged to record levels after crossing Rs 70,000 per kilogram mark, have declined below the Rs 66,000 mark.

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Mumbai, Aug 12 : Futures of gold and silver which were touching new highs every other day lately have started to falter in line with international markets and traders booking profits.

The fall in gold prices, which is considered as a safe haven asset, has also been induced post Russia’s announcement that it has developed the first vaccine for novel coronavirus.

Gold futures slumped for the second straight day on Wednesday. Currently, the October contract of gold on the Multi-Commodity Exchange (MCX) is trading at Rs 51,672 per 10 gram, lower by Rs 257 or 0.49 per cent from its previous close.

It has, however, recovered from the day’s low of Rs 49,955 per 10 gram.

The slump was in line with the international spot prices where gold prices fell as US bond yields advanced and the dollar recovered.

Analysts, however, are of the view that the sentiments in the bullion market are still bullish and the yellow metal would soon be back on the upward trend.

Futures of silver, which surged to record levels after crossing Rs 70,000 per kilogram mark, have declined below the Rs 66,000 mark.

The September contract of silver is trading at Rs 65,758 per kg, lower by Rs 1,176, or 1.76 per cent from its previous close.

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Flurry of lockdowns interrupted recovery in July 2nd half: Bajaj Auto

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New Delhi, Aug 12 : The flurry of lockdowns across the country in many major cities and states interrupted the recovery in the second half of July, according to Rakesh Sharma, Executive Director, Bajaj Auto. “As a result the outcome in July was a bit lower than June retails,” he added.

In an interview with IANS, Sharma said the demand for motorcycles saw smart recovery to previous year’s levels by end June.

On the target for sales, he said “At the start of the quarter, our plan was to achieve cumulative sales of 1 million vehicles between domestic and export, including motorcycles and 3 wheelers. So far, we have achieved sales of just over 2,50,000 vehicles, including three-wheelers in July. Hence, barring unforeseen issues caused by Covid, we should be in line to achieve our Q2 objective of 1 million vehicles,” Sharma added.

Pent up demand is playing a major role in the recovery. “Certainly there is a strong element of pent up demand as there was a blank out of retails for almost 60 days. This has been a major factor in driving the rapid recovery to normalcy witnessed in June and early July,” he said.

He added that the experience of June and July suggests that demand can stage a recovery quite rapidly and is strongly as well as singularly dependent on the progression of COVID and the administration’s response to it. “Hence it is difficult to make forecasts. Our approach is to manage our business in shorter time horizons and recover faster than the industry,” Sharma said.

The three-wheeler segment is yet to pick up across domestic markets, he said. “With people working from home or avoiding the public transport, the demand for three wheeler transportation has taken a hit. This has severely impaired the earning power of 3 wheeler drivers and owners which weakens their ability to take loans or service them. Hence the recovery in 3 wheelers is very poor at only 40% levels,” he said.

Sharma said there is no evidence of downtrading. Bajaj Auto offers a range of motorcycles, starting from the affordable CT 100 and Platina to the KTM 390 series, priced above Rs 3 lakh. “We have not seen preference shifting towards CT100 kick-start, which is the most affordable motorcycle in the industry. On the contrary our new introduction – the Pulsar 125 has outperformed all brands despite being the most expensive 125 cc motorcycle in the market,” he added.

Here are the excerpts…

Q: How do you assess the month of July for Bajaj Auto and the two-wheeler industry?

A: The demand for motorcycles had started to show a smart recovery to previous year levels by end of June and this trend had continued in July. However, the flurry of lockdowns across the country in many major cities and states interrupted the recovery in the second half of July. As a result the outcome in July was a bit lower than June retails. Bajaj Auto’s performance was in line with the industry performance except for the mid 125 cc segment where we recorded handsome retails ahead of the industry and market share gains.

Q: How much capacity is Bajaj Auto operating at and what are the targets for the coming months?

A: At the start of the quarter, our plan was to achieve cumulative sales of 1 million vehicles between domestic and export, including motorcycles and 3W. So far, we have achieved sales of just over 2,50,000 vehicles, including 3W in July. Hence, barring unforeseen issues caused by COVID, we should be in line to achieve our Q2 objective of 1 MN vehicles. This volume is well within our manufacturing capacity.

Q: There is some evidence on the ground that the demand being seen is pent up demand of the last two or three months when the country was under lockdown. What is your view?

A: Certainly there is a strong element of pent up demand as there was a blank out of retails for almost 60 days. It is correct to assume that the decision making process of many customers was interrupted and with the roll back of the lockdowns , these customers are returning to the dealerships. This has been a major factor in driving the rapid recovery to normalcy witnessed in June and early July.

Q: What are the growth estimates for the company and industry for the coming months?

A: The experience of June and July suggests that demand can stage a recovery quite rapidly and is strongly as well as singularly dependent on the progression of Covid and the administration’s response to it. Hence it is difficult to make forecasts. Our approach is to manage our business in shorter time horizons and recover faster than the industry.

Q: How is Bajaj Auto adopting safety measures for the plants and retail dealerships?

A: We have undertaken abundant measures for safe operations of our facilities and to ensure that our employees also feel reassured about their well being. The measures include new work protocols, adequate social distancing, screening and monitoring, regular sanitisation, installation of safety features, training and communication. In doing this we have ensured compliance to Government standards. We have defined these protocols for our dealerships too and provided them with training and monitoring support under the Bajaj SECURE programme. The objective is also to ensure that the customers feel safe about visiting our dealerships.

Q: What is the outlook for three wheelers in the domestic market?

A: The three-wheeler segment is yet to pick up across domestic markets. With people working from home or avoiding the public transport, the demand for three wheeler transportation has taken a hit. This has severely impaired the earning power of 3 wheeler drivers and owners which weakens their ability to take loans or service them. Hence the recovery in 3 wheelers is very poor at only 40% levels. For the outlook to improve, there needs to be more passenger traffic and the finance companies need to recalibrate their risk and return assessment of the sector.

Q: How are the export markets performing for Bajaj Auto?

A: We are currently present in more than 70 countries, but we extensively study the pattern of demand and performance in around 50 countries. We see a mixed reaction on demand in these countries as compared to India. We believe that on an average the demand has reached 80% to 85% of the normal level. Our retail has reached 88% to 85% this July as compared to same period last year. In the case of exports, the inventory pipeline is generally higher due to transit inventory and that creates about a month’s lag between retail improvement and shipment improvement. We are hoping that its positive impact will be sensed from September at our end.

Q: What are the changing consumer trends being seen in these Covid times?

A: On the basis of June and July retails we have not observed any fundamental shifts in consumer preference and therefore in the market structure. Certainly in times of uncertainty the consumer does become more conscious of value and examines the proposition more robustly. However, if a proposition delivers substantive value, they are not shying away from paying more. It is being reflected in the market structure — in terms of the relative shares of each of the different segments of bikes — which has remained intact and there is no evidence of downtrading. Bajaj Auto offers a range of motorcycles, starting from the affordable CT 100 and Platina to the KTM 390 series, priced above Rs 3 lakh. We have not seen preference shifting towards CT100 kick-start, which is the most affordable motorcycle in the industry.

On the contrary our new introduction – the Pulsar 125 has outperformed all brands despite being the most expensive 125 cc motorcycle in the market.

Q: The rural markets seem to be outpacing the demand in the cities?

A: The rural markets were faster to recover but most urban and semi urban locations have also recovered apart from the very big cities like Delhi and Mumbai. Apart from these recovery has been quite secular and evenly spread.

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