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Festive Prospects: Healthy demand to sustain despite challenges says Maruti Suzuki

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Maruti-Suzuki

Passenger vehicle (PV) demand is expected to maintain growth momentum in the coming months despite rising ownership cost as well as production challenges.

Accordingly, PV market leader Maruti Suzuki India believes the upcoming festive season will boost buying sentiments.

Lately, the sequential sales’ momentum has been subdued due to rising ownership and operating cost.

According to Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India: “Healthy sales momentum is expected to be maintained during the main festive period starting from mid-October. Till now, the festival of Onam saw a decent sales uptrend. However, there are uncertainties on the supply side.”

In India, the main tranche of the festive season commences from Navratri till Diwali.

“Factors such as shift to personal mobility from shared transport, lower interest rates, migration towards established brands as well as pent up demand are giving a push to sales momentum,” he said.

“Rural sector is also doing well because the income levels have improved.”

Presently, the auto giant’s 40 per cent sales come from the rural areas while 60 per cent is from urban India.

Last month, the auto major’s total sales rose to 130,699 units from 124,624 units sold during the corresponding period of 2020.

The total sales in the month included domestic sales of 105,775 units, off-take to other OEM of 4,305 units and exports of 20,619 units.

However, on a sequential basis, it had sold 162,462 units in July 2021.

“Production has been impacted due to electronic components shortage in August. This is critical as cost and waiting period increases due to lesser production.”

The automobile major has reported an 8 per cent fall in its vehicle production in August.

It produced a total of 113,937 units last month, compared to 123,769 units in August 2020.

Besides, vehicle acquisition cost has gone up due to rising commodity prices and high regulatory levies.

India’s auto market is considered to be highly price sensitive unlike those of Japan and the European Union.

At present, the industry is grappling with rising costs of steel, plastics and rare metals in addition to high forms of levies, insurance and road tax.

Recently, the company had to go in for a price hike due to rising commodity prices, especially those of steel, copper, rhodium and palladium amongst others.

“Earlier, we tried not to raise prices to revive demand by cost cutting and other measures. But continuously rising material cost has left us with no options.”

Notably, 70 per cent of the overall vehicle cost is of manufacturing materials.

“Till now, we had to increase prices four times, in January, April, July for CNG cars and Swift and in September. Currently, commodity prices have started to soften-up a bit, the industry believes that the material cost will plateau out on these levels and soften more in Q3FY22 and Q4FY22.”

Furthermore, this phenomenon has in some degree countered the positive effects of easy availability of finance along with low interest rates.

Additionally, vehicle operating cost has surged as a result of exponential rise in fuel prices.

“Running cost, largely depends on fuel efficiency and its price. Costs of diesel and petrol are at their peak, thereby negatively impacting car sales.

“Positive thing is that CNG running costs are now much less than before and CNG cars are gaining traction.”

Business

Nifty, Sensex see firm recovery after RBI’s support to rupee

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Indian equity benchmarks posted a firm recovery, sustaining gains for the second week as investors looked past early inflation worries, especially after the central bank’s special dollar window for oil marketing companies helped the rupee rebound.

Nifty added 2.78 per cent during the week and gained 0.65 per cent on the last trading day to reach 23,146.

At close, Sensex was up 413 points or 0.56 per cent at 74,729. It gained 3.11 per cent during the week.

Market sentiment was dented earlier in the week by consumer inflation hovering near the upper end of the Reserve Bank of India’s tolerance band and a hotter‑than‑expected wholesale price index print that pushed benchmark bond yields to multi‑year highs.

The central bank raised the daily cash reserve ratio maintenance requirement to absorb surplus liquidity, adding to caution. Market confidence, however, improved after the central bank’s special dollar window for oil marketing companies and tighter hedging norms drove a rupee-rebound, analysts said.

“Expectations of a review of LTCG tax and STT, softer crude prices and easing bond yields further revived risk appetite, prompting investors to tilt towards counters with strong Q2FY27 business updates, though the rally remained concentrated in large-caps, with mid-caps posting modest gains and small-caps ending marginally lower,” they added.

“Participants should remain selective, maintain disciplined position sizing and favour a hedged approach amid elevated macroeconomic and earnings-related uncertainty,” the experts said.

Information technology (IT) sector emerged as the standout performer on robust earnings and upbeat management commentary, while healthcare and pharmaceuticals lagged as investors favoured sectors with stronger near-term earnings visibility.

Meanwhile, fast‑moving consumer goods stocks came under pressure amid concerns over margin compression from elevated input costs.

Broad market indices performed largely in line with the benchmark indices as Nifty Midcap100 added 0.58 per cent and Nifty Smallcap100 dipped 0.12 per cent during the week.

In addition, foreign institutional investors (FIIs) turned net buyers of Rs 11.66 billion in Indian equities on Friday after overall selling eased sharply this week as market sentiment improved.

FIIs remained net sellers for the ninth straight week but their weekly selling moderated to Rs 89.91 billion from Rs 302.94 billion the previous week. On the other hand, domestic institutional investors (DIIs) stayed net buyers for a ninth consecutive week at Rs 78.13 billion, though they were net sellers of Rs 36.61 billion on Friday.

The sustainability of the recovery will hinge on earnings growth broadening beyond IT with revenue and margin delivery across financials, consumption and industrials under close scrutiny, analysts said.

Investors are keen on India’s October PMI that will offer insight into domestic demand momentum, while US jobless claims and Japan’s inflation print will shape global rate expectations.

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Japanese delegation visits MLFF tolling system near Delhi

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A Japanese delegation visited the Multi-Lane Free Flow (MLFF) tolling system in Mundka-Bakkarwala on Friday on the sidelines of the 12th India–Japan Joint Working Group Meeting on Roads and Road Transportation.

The MLFF system provided insights into India’s technology-driven initiatives for seamless and efficient highway travel.

At the MLFFs, the National Highways Authority of India (NHAI) uses a combination of RFID-based FASTag electronic toll collection, automatic number plate recognition (ANPR) and AI analytics to allow vehicles to pass through charging points without stopping, slowing down or remaining in a designated lane.

MLFFs have already been installed at Choryasi in Gujarat, Mundka in Delhi, Gharaunda in Haryana and Daulatpura and Manoharpura in Rajasthan.

While 12 further locations have been awarded for conversion, tenders have also been launched covering an additional 104 toll plazas around the country.

The MLFF at Choryasi on the Surat–Bharuch section of NH-48 was the first to become operational.

The one at Mundka on Delhi’s Urban Extension Road-II was the second.

The expansion plan represents a significant shift from India’s traditional barrier-based toll plazas.

Rather than moving immediately to satellite-based toll collection, the Indian government has opted to build on the country’s established FASTag system and combine it with ANPR and AI.

Expert committees had recommended further consideration of GPS-based barrier-free tolling because of security, privacy and operational control issues, the Ministry of Road Transport and Highways has indicated.

FASTag and ANPR/AI was thus selected as the technology for the current MLFF programme.

The session of the India–Japan Joint Working Group on Roads and Road Transportation Sector was successfully held at Bharat Mandapam in New Delhi.

Discussions focused on advanced construction technologies, bridge and tunnel engineering, sustainable infrastructure and digital innovations, fostering the exchange of technical expertise and best practices.

“The meeting reaffirmed both nations’ commitment to safe, sustainable and technology-driven road infrastructure, aligned with the vision of Viksit Bharat @ 2047,” the Ministry said in a statement.

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India-US trade deal 98-99 percent done: US official

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Washington, Oct 16: A long-awaited trade agreement between India and the United States is almost complete, with only one or two per cent of negotiations remaining, a senior US official said, signalling that the two countries are approaching a breakthrough after months of high-level discussions.

The official said the biggest issues had already been resolved and that negotiations were continuing at the highest political levels, including between President Donald Trump and Prime Minister Narendra Modi.

“The biggest items have been settled. I mean …., it’s pretty much done. We have that one, one or two per cent left,” the official told reporters during a State Department briefing on Friday.

The remarks came ahead of Secretary of State Marco Rubio’s scheduled visit to India, where he will hold discussions with Indian government officials and leading business executives in Mumbai and Jamnagar.

The official said the two governments remained in constant contact over the proposed agreement.

“We are actively engaged every single week,” the official said, adding that high-level discussions on the trade deal were taking place regularly.

The official cited recent diplomatic engagements involving US Trade Representative Jamieson Greer, India’s Commerce Minister Piyush Goyal and conversations between Trump and PM Modi as evidence of the momentum behind the negotiations.

However, the official also identified a significant complication that had delayed the agreement.

An earlier understanding had been linked to the International Emergency Economic Powers Act, or IEEPA, but the legal framework had to be reconsidered after the law was struck down, according to the official.

The development forced negotiators to revisit elements of the proposed agreement and contributed to several additional months of discussions.

Despite those complications, the official expressed optimism that the remaining differences could be resolved soon.

Rubio is scheduled to travel first to Uzbekistan for meetings with Central Asian leaders before proceeding to India.

In Mumbai, he will meet Indian government counterparts and senior executives from some of the country’s largest companies.

The official said the decision to visit Mumbai rather than New Delhi reflected the administration’s growing emphasis on commercial diplomacy and Indian investment in the United States.

Rubio will also travel to Jamnagar.

The official said Washington was seeking closer engagement with India across information technology, pharmaceuticals, defence cooperation and other sectors.

Further visits by senior American Cabinet officials are also anticipated next year as both governments seek to expand bilateral engagement.

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