Auto, Manufacturing Industries At Loss From The Declining Market Needs

New projects and investments have been put on hold, most of all, Auto, Manufacturing industries are facing the heat wave from the declining market needs.

India, Tax cut, Automotive Industry
India's automotive industry is likely to be one of the key beneficiaries of the recent corporate tax cut. Wikimedia Commons

The ongoing economic slowdown in the country has claimed the livelihood of lakhs of people. New projects and investments have been put on hold, while a revival could take longer as investor confidence in companies cut a sorry picture at the exchanges. Most of all, Auto, Manufacturing industries are facing the heat wave from the declining market needs.

Data from the bourses suggest that in just the past one year, the automobile and manufacturing companies, have seen over one-third of their share value getting eroded, on average, indicating a sharp decline in these companies’ abilities to raise capital in the market.

During the period in consideration, the Nifty metal index has lost the most among the 11 sectors constituting the benchmark index.

Manufacturing companies like SAIL and Jindal Steel, which constitute the metal index, declined by 35 per cent, on an average. Not a distant second was the auto index, which fell over 33 per cent.

Auto, Manufacturing, Market, Growth
Robots work on the cab of a 2019 Ram pickup at the Fiat Chrysler Automobiles Sterling Heights Assembly Plant in Sterling Heights, Mich., Oct. 22, 2018. Manufacturing is one are where robots are part of the workforce. VOA

Among the 15 constituent stocks of the auto index, Tata Motors, Motherson Sumi Systems and Ashok Leyland have been worse hit, losing 55 per cent , 66 per cent and 51 per cent, respectively. Bajaj Auto seems to have bucked the trend, coming down merely 2 per cent amid companies severely hurt owing to the slowdown.

Latest data shows that automobile sales for the month of August hit the lowest since 1997-98.

Steel companies are witnessing a similar trend. The state-owned Steel Authority of India (SAIL) has lost over 57 per cent, while Jindal Steel has also shed over half of its share value in the last one year.

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Six of the 15 companies constituting the index have lost over 40 per cent of their share value.

The state-run bank index – Nifty PSU Bank index – despite a slew of measures that have been announced for the sector, has yet to regain investor interest. The PSU (public sector undertaking) bank index has declined by 21 per cent during the same period.

The Nifty pharma index – investment in which firms are considered to be relatively safe during downturns, and, therefore, called defensive investments — fell 22 per cent.

The Nifty media index also also shed over 30 per cent. (IANS)

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