PMI eases to lowest in three months
- Although manufacturing activity continues to expand gradually, the rate of expansion fell to its lowest in the last three months. For November, the manufacturing Purchasing Manager’s Index eased to 56.3 versus 58.9 in October, which was the highest in the past decade.
- Similar buoyancy was also observed in key sectoral indices such as Nifty Commodities (+11.5%), Nifty Auto index (+14.6%) for November 2020.
Vodafone-Idea hikes tariffs
- The tariff hike by telcos was in the offing. The management of Bharti Airtel has been quite vocal about it citing that current tariffs are unsustainable.
- Vodafone-Idea has hiked tariff of two of its postpaid plans by ₹50. As per reports, the company lost nearly 15 crore users in the past nine quarters and runs the risk of losing another 5-7 crore subscribers in next one year. Hence, a tariff hike seemed quite natural to arrest the decline in revenue. However, in case the competition delays tariff hikes, Vodafone-Idea could lose more subscribers. That’s quite a catch-22 situation.
- Meanwhile, the shares of Vodafone Idea (+2.5%) and Bharti Airtel (+3.5%) for the day.
November auto volumes a mixed bag
- Market leader Maruti reported a 2% year-on-year decline in its November domestic passenger vehicles sales. The fall mainly resulted from a 5% drop in the compact car segments (which include cars such as Alto, WagonR, and Swift). Lower sales to dealers could help to correct excess inventory, especially in this post-festive period. Shares of Maruti were up 0.8% for the day.
- For M&M, domestic passenger vehicles sales (mainly utility vehicles) growth was robust at 24% compared to November 2019. Similarly, its domestic tractor sales grew rapidly by 55%. The festive season, coupled with strong rural demand, augured well for M&M products. Its shares rose 2.0% for the day. Domestic tractor sales for Escorts also grew by a strong 31%. Shares of Escorts witnessed profit booking and were down (-2.0%) for the day.
- Among the commercial vehicles (CV), the medium and heavy trucks are seeing a turnaround in demand as the economy shows signs of recovery. Domestic CV sales of Ashok Leyland grew by 4% over last November. Its M&HCV segment saw a robust 23% increase in sales. The growth rates would have been significantly higher, were it not for the 90% year-on-year decline in bus sales (since schools are shut). Nevertheless, Ashok Leyland shares were up (+0.6%) today. Similarly, Volvo-Eicher’s domestic CV sales grew by 5% and its shares ended flat today.
- Bajaj Auto reported a 7% growth in sales over last November. The Pune-based automaker’s shares picked up by 2.1% today.