Two-wheeler manufacturers and consumer durable makers rallied in a flat market on Friday after the government said public sector lenders will offer cheaper loans to stimulate demand for struggling sectors. The decision to ask banks to offer cheaper loans is aimed to stimulate consumer durable demand ahead of the festival season. (Read the full story here)
Bajaj Auto and Hero MotoCorp, India's biggest two-wheeler manufacturer, traded with 1.3 per cent gain each as of 09.26 a.m. Bajaj Auto traded at Rs. 2,148, while Hero rose to Rs. 2,056. The two stocks were among the top Nifty gainers.
Consumer durable makers such as Bajaj Electrical, Videocon Industries and Whirlpool also rose sharply. Bajaj Electricals jumped 4 per cent to Rs. 169, while Videocon traded 2 per cent higher at Rs.180.
The move comes at a time when persistently high inflation coupled with shrinking employment opportunities in a slowing economy have crimped consumer demand.
Growth in consumer spending slowed down to 1.6 per cent year-on-year in the quarter through June from 4.3 per cent a year earlier, dragging down economic growth for the quarter to a near four year low of 4.4 per cent.
The move is expected to boost the production of consumer durables items such as two-wheelers, refrigerators, washing machines and televisions, which has been hit by high interest rates and inflation. The sector has failed to register growth since last November.
However, Sonal Varma, India economist of Nomura said "this as a sustainable strategy to kickstart consumption".
The job market and income growth - the key drivers of consumption - remain lacklustre, Ms Varma said.
"As both fiscal and monetary policies are tightening during a slowing economy (pro-cyclical), we expect domestic demand, including consumer demand, to remain weak," she added
Bajaj Auto and Hero MotoCorp, India's biggest two-wheeler manufacturer, traded with 1.3 per cent gain each as of 09.26 a.m. Bajaj Auto traded at Rs. 2,148, while Hero rose to Rs. 2,056. The two stocks were among the top Nifty gainers.
Consumer durable makers such as Bajaj Electrical, Videocon Industries and Whirlpool also rose sharply. Bajaj Electricals jumped 4 per cent to Rs. 169, while Videocon traded 2 per cent higher at Rs.180.
The move comes at a time when persistently high inflation coupled with shrinking employment opportunities in a slowing economy have crimped consumer demand.
Growth in consumer spending slowed down to 1.6 per cent year-on-year in the quarter through June from 4.3 per cent a year earlier, dragging down economic growth for the quarter to a near four year low of 4.4 per cent.
The move is expected to boost the production of consumer durables items such as two-wheelers, refrigerators, washing machines and televisions, which has been hit by high interest rates and inflation. The sector has failed to register growth since last November.
However, Sonal Varma, India economist of Nomura said "this as a sustainable strategy to kickstart consumption".
The job market and income growth - the key drivers of consumption - remain lacklustre, Ms Varma said.
"As both fiscal and monetary policies are tightening during a slowing economy (pro-cyclical), we expect domestic demand, including consumer demand, to remain weak," she added
Credits: ndtv
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