No Major Gains Yet

India’s automotive sector exhibited healthy growth in sales, touching record levels in August on a YoY basis as the semiconductors issue eased further, thus assisting companies to step up production ahead of the major festive season

During the fortnight, domestic frontline equity indices Nifty 50 and Sensex ended on a flat note with paltry gains of 0.28 per cent and 0.05 per cent, respectively. The BSE Mid-Cap and Small-Cap indices significantly outperformed the broader markets by recording impressive gains of 3.86 per cent and 3.43 per cent, respectively. According to the data recently released by the National Statistical Office (NSO), the Indian economy achieved its fastest annual expansion in a year during the April-June quarter on account of better performance by the agriculture and services sectors. 

India’s gross domestic product (GDP) in the three months up to June 30, 2022 was 13.5 per cent. However, this number is still lower than the Reserve Bank of India’s projection of 16.2 per cent GDP growth in Q1FY23. India continues to remain the fastest growing major economy as China registered low economic growth of 0.4 per cent in the April-June 2022 quarter. As per the latest official data, the output of eight core infrastructure sectors contracted to six-month low of 4.5 per cent in July against 9.9 per cent in the year-ago period. 

As corporate India comes out of their deleveraging phase and gravitate towards banks for their funding requirements given that bond yields have risen sharply relative to lending rates of the banks, the credit growth in the industries’ segment has hit an eight-year high. According to the latest data from the Reserve Bank of India (RBI), loans to micro, small, medium and large industries rose to ₹31.82 trillion as of July-end, up 10.5 per cent on a YoY basis. Even on a MoM basis, its loans witnessed 0.4 per cent growth and on a year-todate basis, it is up by almost 1 per cent. Also, credit to industry makes up for 27.7 per cent of the non-food credit of the banking industry. Previously the credit to the industries segment grew at such a pace in May 2014 when corporate credit growth recorded a growth of over 11 per cent. India’s automotive sector exhibited healthy growth in sales, touching record levels in August on a YoY basis as the semiconductors issue eased further, thus assisting companies to step up production ahead of the major festive season that has recently kicked off with Ganesh Chaturthi.

Also, new model launches in diverse segments were a key factor that helped to maintain the high momentum in demand. In August, India’s top seven passenger vehicles witnessed a strong 30.2 per cent in dispatches on an annual basis. This is the sharpest year-on-year growth seen in the current fiscal with the exception of May when the growth came on last year’s low base. India’s largest automobile manufacturer, Maruti Suzuki dispatched 134,166 units in India in August, recording a robust 30 per cent growth over the corresponding month a year ago.

As per a recent report by Bizom, India’s fast-moving consumer goods market increased 6 per cent in value in August compared to July, reversing the past three months of consecutive sequential decline as the demand for personal care and commodity products picked up. Sales of groceries grew by 23 per cent compared to a year ago. The BSE FMCG index climbed 1.75 per cent over the fortnight. Among the BSE sectoral indices, realty and automotive were among the Top Gainers that soared 6.40 per cent and 3.86 per cent, respectively, during the fortnight. The BSE IT index was the top loser during the same period, plummeting 4.09 per cent. During the fortnight, FIIs were net buyers to the tune of ₹1,755.90 crore and DIIs were net sellers to the tune of ₹733.57 crore.