Market Movers: Auto sector catches festive bug as value investors raid stocks

MUMBAI: The festive bug has finally caught up with the automobile sector, which has been languishing in the market for what may seem like forever.

The Nifty Auto index soared 3 per cent and outpaced the gains of even the trendsetting realty index, a feat that would have been improbable last week. The gains were led by big boys Maruti Suzuki India, Mahindra & Mahindra, and Tata Motors.

The sudden spike in the sector is a welcome sight as investors bet that the festive season will provide a much-needed impetus to demand. While there ought to be pent-up demand given that the season is coming just as state governments are easing COVID-19 restrictions, there is a sense that it could also be long-lasting because of the receding threat of a third wave owing to a higher vaccination rate.

Multiplexes make blockbuster move

Mutliplex chain owners were in demand as the Maharashtra government’s decision to further ease restrictions for movie-goers boosted sentiment. PVR and Inox Leisure saw their stocks jump 5 per cent and 7 per cent as investors anticipate demand revival given a strong slate of movies that are expected to launch during the Diwali season.

Analysts have already noticed that food and beverage sales for theatre companies are nearly back to their pre-pandemic highs, which augurs well for both revenue and operating performance.

Caustic soda makers fly

Investors of chemical companies that specialize in the manufacturing of caustic soda were in for a treat this morning. Shares of Tata Chemicals, Gujarat Alkalies, DCW and DCM Shriram jumped 3-10 per cent in the session as caustic soda prices in China jumped.

So besides the Evergrande crisis, China is also battling a major power shortage. The power shortage is forcing several industries to trim work hours causing an imbalance in global supply and demand, and thereby pushing prices of several chemicals higher in trade today.

IT stocks take a knock

With the way the information technology sector has rallied over the past two months, today’s fall is as surprising as it gets. The Nifty IT index ended nearly 3 per cent lower led by steep fall in Infosys, HCL Technologies, TCS and Wipro.

The sector has been a victim whenever market participants’ appetite for risks improves. However, the losses are only going to invite the dip buyers in the market given that analysts are looking ahead to another quarter of blockbuster earnings when the September quarter earnings season kicks off next month.

Zee investors keep the faith

The day started for Zee Entertainment on a sour note as its stock plummeted 5 per cent following Invesco Oppenheimer’s letter to Zee’s board. The largest minority shareholder urged the company to call for the EGM and questioned the locus standi of the current board to approve a merger with Sony India, when Invesco has moved the resolution to kick half of them out of it.

However, the stock managed to recoup all the losses within a few hours as most investors are backing the Punit Goenka-led board to win enough shareholder votes to pass its merger resolution and defeat Invesco’s. The corporate battle of the ages has just become even more interesting.

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