Market Movers: What drove investors to buy automobile stocks, PolicyBazaar?

MUMBAI: Investors were cueing up to buy automobile stocks like it was 2016 as the sector’s days of brooding appear to be finally over.

The automobile sector has had a tough year, at least tougher than the rest, given the second wave of the pandemic and the acute shortage of semiconductors that forced them to close factories temporarily. And yet, there seems to be renewed hope for the sector.

Brokerage firm Morgan Stanley earlier today proclaimed that the global semiconductor shortage that has bogged down carmakers around the world seems to be in the rearview mirror. That is immense for Indian carmakers, who are seeing strong demand from customers but could not make enough cars to satisfy it.

Naturally, investors were enthused too, as the Nifty Auto index jumped 2.5 per cent on a day when the Nifty50 fell 0.6 per cent.

PolicyBazaar is garnering strength
When shares of PB Fintech, the parent of online insurance broker PolicyBazaar, were listed with a little less than 30 per cent premium on Monday, which investors termed as a muted debut.

Expensively priced like other startup IPOs before it, PolicyBazaar did not elicit the enthusiasm that the likes of Zomato and Nykaa did. That said, today’s more than 11 per cent gains confirm that investors are steadily warming up to the company’s prospects.

The insurance broker is a market leader in its segment and is part of an industry that still has miles to go before it matures. In India, institutional investors are generally suckers for monopolies and PolicyBazaar’s dominance will be too enticing for the institutional investor to ignore.

Cement stocks get a beating
Shares of cement companies came under a hammering from investors after Informist Media reported that companies have taken a price cut in Delhi, a first in a long time.

The price cut comes at a time when investors were counting on companies to pass on the rise in costs to customers given hopes of improvement in demand conditions post-monsoon.

However, the abrupt price cuts reflect that companies are not yet certain that customers can absorb more price increases given that sharp uptick seen in the past 16 months. That is a quandary for cement companies, which may see another quarter of margin pressure if they are unable to pass on cost inflation to customers.