Moneycontrol Pro Panorama | Is the demand graph finally getting into shape?

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Automobile and real estate stocks are leading the gains on the National Stock Exchange (NSE). At noon, the Nifty Auto index was up almost 1 percent. A shortage of electronic components continues to constrain production of automobiles, particularly passenger vehicles and two-wheelers. Tata Motors and commercial vehicle makers bucked the trend, reporting a decent rise in despatches last month.

Even so, as an analysis by our research team indicates, production constraints are gradually easing. Most automobile manufacturers reported monthly rise in October wholesale despatches.

Maruti Suzuki India’s total volumes are up 60 percent from September. With demand holding up for passenger and commercial vehicles, the monthly improvement in despatches raises hopes of a better H2 FY22. Still, rising prices can pose challenges.

“While festivals could be a tad disappointing, we see scope for regaining lost volume during the leaner months post festivals, led by sustained demand and improving supply chain dynamics,” analysts at Nirmal Bang Institutional Equities said in a note.

Maruti Suzuki is among the major gainers of the Nifty 50 index in Tuesday’s trade. The company began taking bookings for its new-gen hatchback. The quarterly results of Tata Motors too indicate a better outlook. Its UK subsidiary Jaguar Land Rover expects a gradual improvement in production while the Indian business is seeing good traction in demand. Read our analysis of the results.

On the macro front, our recovery tracker continues to indicate a broad-based recovery with intermittent volatility in key indicators. However, monthly CMIE data indicate an uptick in the unemployment rate in rural areas. Separately, government data point to elevated demand for the Mahatma Gandhi National Rural Employment Guarantee Act or the MNREGA scheme.

The high demand for the jobs scheme underscores rural distress, stemming from an absence of jobs. It does not paint an encouraging picture.

“If it remains high despite the pandemic waning, then there is a need to be less gung-ho about the anticipated rebound in GDP growth in the current fiscal after the contraction in the previous year,” warns Subir Roy in today’s piece.

The dawn of the quantitative tightening era? (republished from the FT)

Picks from our technical analysts: Jindal Steel Power, Network18, Hindalco and Asian Paints

(These are published every trading day before markets open)

R Sree Ram

Moneycontrol Pro