Fear Factor: Markets Fall on Global Cues
Benchmark indices extend losses to fifth consecutive day; foreign institutions move to safer assets
The bear grip on the domestic equities intensified with benchmark indices extending losses to the fifth consecutive day on Friday as rising US-North Korea tensions continued to roil global market sentiment. Closing at an over one-month low, the indices slipped more than 1% each on heavy selling from foreign institutions, which are fleeing the riskier emerging markets to safer assets like US treasury bonds and gold. Sensex and Nifty slipped 3.5% this week, their worst weekly performance in 18 months.
The Sensex ended down 317.74 points, or 1%, at 31,213.59 and the Nifty lost 109.45 points, or 1.1%, to close at 9,710.80 after breaching 9,700 during the session. After fal- ling 4-5% in the first four sessions of the week, BSE mid-cap and small-cap indices fared relatively better than large-caps on Friday, ending down only 0.2%. Fear gauge India VIX jumped above the 15level for the first time since February, ending up 10% at 15.19. Among other Asian markets, stocks ended weak with Hong Kong’s Hang Seng falling the most by 2%. Gold touched the highest in more than two months on Friday.
At home, foreign portfolio investors sold shares worth .₹ 1,943.86 crore while domestic institutional investors bought shares worth .₹ 2,016.84 crore. SBI was the worst performer on Sensex, ending down 5.4% to .₹ 280.65 due to weak results.
Vangaal expects the segment sales to reach 1.4 million units by 2020, or even 1.5 million “with the kind of interest that new entrants are showing in the segment”.
In fact, Maruti Suzuki and Hyundai Motor which together account for about a third of the passenger vehicle market in India are also heavily focusing on the SUV segment, with models such as the Vitara Brezza and Creta.
The carmakers that are finalising their plans to enter India have all begun work on their SUVs for this market. They are expected to launch more than half a dozen products in the ₹ 6-25 lakh price range, industry executives said.
MG Motor India, the subsidiary of China’s Shanghai Automotive, may become the first among the lot, with a C segment SUV to take on the newly launched Jeep Compass in 2019, and a B segment compact SUV a year later to take on the Hyundai Creta. The company is very close to sealing a deal to take over US partner General Motors’ factory at Halol in Gujarat.
MG Motor executive director P Balendran said the company is looking at various programmes including an SUV for India. “But products are yet to be finalised. It may only happen after the Halol plant agreement is signed,” he said.
South Korean rival Kia has plans of introducing a Creta competitor in late 2019, while Changan and PSA, too, are eyeing the same segment that has become a hot selling proposition in Rs 8 lakh to Rs 15 lakh with sedans taking a back seat there. Seeing the growth in the SUV space, Beiqi Foton, China’s largest commercial vehicle maker, decided to change track and, instead of launching trucks in India, is working on vans and SUVs for the country under the Borgward brand. It plans to launch a big van to take on Force Motors’ Tempo Traveller and a C segment SUV to take Jeep Compass and Mahindra XUV. While companies like MG Motor are eyeing a top-down approach for India — entering the market with a premium product — PSA is looking to bring an entry-level SUV post the strong acceptance of rival Renault’s Kwid, to also take on the KUV and Maruti Suzuki Ignis.
“We will really look at both established segment as well as those which are growing the fastest. Therefore… if we bring three to four models, at least one of them has to be a CUV or SUV, that is a minimum, beyond that it is too early to say,” Emanneul Delay, executive vice-president for the India Pacific region at PSA, told ET earlier this year.