Market Movers: Chip shortage short circuits Tata Motors, banks find their groove

MUMBAI: When the going gets too good, life always throws a spanner in the works. Just ask .

Just as the Indian business of the car and commercial vehicle maker was showing signs that a post-second wave recovery is underway, the company’s subsidiary, Jaguar Land Rover, dropped a stinker. JLR on Tuesday warned that its volumes will plummet 50 per cent in the September quarter not because nobody wants to buy its cars but due to the unavailability of those tiny-sized chips that make the world tick these days.

JLR believes this could cause 1 billion pound sterling in cash outflow as well as negative operating margin in the second quarter. With the company suggesting that the situation will not normalize for another 12-18 months, investors headed for the exit door.

Cash market volumes soared nearly 800 per cent as the stock nosedived 8.5 per cent on NSE, suggesting that not only short-term traders but also long-term investors dumped the stock fearing gloomier days ahead for the company. After nearly 80 per cent gains in the year so far, Tata Motors may be staring at a long winter in the months to come.

Moving on from the sadness of Tata Motors, and onto the happy vibes of banks.

Finding their groove
Two days and gains of over 500 points later, it is safe to say that bank stocks have finally found the groove they have been missing since the middle of June. The banking pack single-handedly helped the Nifty50 index from falling further given the losses being run by other index majors like Reliance Industries and Infosys.

The ‘happy days’ vibe from the banking pack, especially private banks, has a lot to do with the positives that emerged from the RBI’s financial stability report and the strong updates for the June quarter given by the likes of HDFC Bank. Perhaps now that even the second wave has failed to show any major dent to these banks’ balance sheets, investors might join in the party.

Patience pays off
After three years of trying, finally managed to scale past its previous record high and set a new one on Tuesday. The move reflects growing optimism that investors are feeling for the company in the wake of a new management at the top and signs that its products are being fancied by the masses. Better late than never, as they say.

Back in business
Cement stocks had entered a period of lull in the wake of the second wave of Covid-19 infections in the country. Frankly, not many people were thinking about buildings to build and houses to construct at the time. However, as lockdowns have eased, construction activity is picking up speed much like it did after the first wave. Investors believe a repeat performance from cement stocks could be on the offering just like last year. Demand is recovering and there are whispers of possible price hikes. And new money in the market needs to chase something, so why not cement.

While you guys chase cement manufacturers, we need to go chase our house cat for his evening meal. So long, dear readers!