Auto Numbers Analysis – More than Just a Dip!

While flipping through the morning newspapers, I came across the headline in The Mint

https://www.livemint.com/auto-news/car-sales-in-2018-19-sputter-in-signs-of-worry-for-the-indian-economy-1554745268049.html

The article talks about how the likes of Maruti Suzuki, Tata Motors, Hyundai etc have had a poor run in the last quarter and so the numbers reported are below the general expectation.

Image result for auto sector

Here goes the argument of the author – low car sales numbers indicate that the consumption story in India is hitting a road bump. This to the author is an indication that all is not well with the Indian economy and we should brace ourselves with more bad news in days to come – at least in the automobile and car manufacturing space.

Arguments in favour of this line of thought shared in the article are as below –

  1. Higher fuel prices adversely affected sales for the whole year
  2. Insurance cost is escalating, leading to more discouragement in buying the automobile
  3. Higher GST on the high-end premium segment vehicles
  4. Higher interest rates of lending with typical borrowing cycle for a new vehicle lasting for 10 days when compared to 2 days in the past. This is more in the context of commercial vehicles though.

While the arguments above are strong enough for one to believe that auto manufacturers are actually going through a rough patch but here are few more factors that need consideration before any conclusion can be made.

  1. For reasons best known to the authors, they have simply ignored the growing population and now saturation of shared cab driving options available in almost all Tier I to Tier IV cities. In Delhi NCR, one can see that the roads are completely saturated with a high density of Ubers and Olas plying. One estimate is that there are more than 3 Lakhs Ubers and Olas plying in Delhi alone. With such a high incidence of vehicles in the last 3 to 4 years, a change in the buying habits of the consumers is quite natural.
    • Consequently, if there was a need to buy 2 cars, families now are ready to stick with one.
    • Also, the fast growth rate that these ride-sharing apps saw in the last few years is difficult to replicate so the growth triggered by them is bound to flatten or dip now onwards.
  2. Growing awareness of environmental hazards from the vehicular emissions is nudging people to take public transport more often now. In cities like Delhi NCR, metro trains snake through most of the heavy traffic corridors of the city now. This has again led to a reduction in reliance, and so the need, of a private vehicle.
  3. Wait for the electric vehicles or similar options have also left the window open for people to consider cleaner fuel options, as they become available. I have people in my circle who are deferring purchase of their private cars in anticipation of the arrival of electric vehicles in the next few years.

A combination of these additional factors above indicates that the markets are not going to witness any significant uptick in sales numbers. Political factors like Brexit are adversely affecting certain counters as well.

It is therefore advisable to off-load your holdings in the auto sector till a mega announcement like the advent of electric vehicles is not announced. That would be the right opportunity to enter the sector again.

Perhaps the author of this LiveMint article should also look around himself/herself and make a better analysis of the changes that are happening in a sector.

Do #GDP Numbers spook #Sensex?

India is going to witness next general election in few months and things are warming up now with WhatsApp and other social media groups active with political discussions. Recently, in an intense discussion with one of my close acquaintance, a statement was made that Stock markets have rejected the GDP growth numbers reported by the current government and had tanked after the numbers were reported. This of course was followed by diatribe (in WhatsApp messaging though) on the current regime. Laced with the non-indexed assertion on prevailing fuel prices. Referring back to the stock markets statement, this was an important statement because the GDP numbers were pretty good. At 8.2% growth, the numbers indicated a sustained revival of the economy with post demonetisation adjustment.

Image result for sensex

Never shy of such opportunities to explore and validate such assertions with data, I decided to do some quick review of the performance of Sensex on the next day to the announcement of GDP numbers.  A very simple exercise based on the announcement date, time and GDP number fetched from the following sources:

  1. GDP Data – https://in.investing.com/economic-calendar/indian-gdp-quarterly-434
  2. Sensex Historical Data from good old Yahoo (https://finance.yahoo.com/quote/%5EBSESN/history/)

Lets look at some of the analysis that came out:

As one can clearly see there is nothing in this data that indicates there is any correlation. In fact the inbuilt CORREL function for Google Sheets gives the correlation as just as 3.41%.

This is a whoppingly low number for correlation against the claims that we hear or the opinions people build.

Now lets look at some of the charts that I created out of this data.

Percentage (gain and Drop) vs. Sensex Date(1)

Lets take another look with a parallel comparison of the GDP gain/loss numbers and Sensex gain/loss numbers.

 

GDP %age (Gain or Drop) and Sensex %age (Gain or Drop)(1)

 

 

If we take a look at data on some specific dates, it gives a different view altogether –

  1. On May 31, 2010 – We had the highest drop of 2.19% while the GDP growth was reported at a handsome 8.6%
  2. From Aug 30, 2011 to Nov 30, 2012 – Markets repeatedly rejected the GDP numbers and closed with a negative bias
  3. On Feb 28, 2011 – This is the day when Sensex gained most in this data set i.e. by 2.58%. Please note that GDP numbers were full 70 basis point lower at 8.2%  against 8.9% that was reported on Nov 30, 2010.

So apart from individual opinions and perhaps biases against certain individuals running the current regime, there is nothing suggesting that there is any reason to complain if the markets tanks (even in absolute numbers) the next day to the GDP numbers announcement.

#AsianGames – The Indian Story

Asian Games just concluded in Indonesia on Sunday Sep 2, 2018. Held every four years, the games have been a very competitive event where major countries like China, Japan, India and many more participate with two fold objective –

  • Continue to encourage the local sportsmen in the region
  • Identify and encourage talent in sports that are not part of the Olympics but are important in the local region of Asia

Image result for indian contingent in Asian Games

Asian games is unique as it does not see participation from many countries that have modern and advanced infrastructure as compared to the Asian countries. At the same time, it gives a glimpse into the effective cross-region growth in talent and a desire to do more in the world of sports.

It also plays a good source of income for the host country as there is good coverage of the events across a large population sitting in a relatively close timezone. For companies that are focused on Asian markets, this is the event where they pump their marketing dollars (oops Asian currencies I mean).

From last few years, the interest in Sports events in India has really picked up. With multiple new competitions in terms of PL started with IPL, KPL, ITPL etc, the general awareness about sports is tremendously increasing. And with government support through campaigns like #HumFitToIndiaFit – there is more and more interest among people for the sporting events.

With this background, I put together some simple insights in Tableau Public for the historical performance of India in Asian Games. With a legacy starting from 1952, data collection was not a challenge. However, I had some learning curve with Tableau but found it quite inquisitive and interesting to use. Though I found that publishing to the Tableau public library is quite a painful exercise with even small data sets failing to publish. The last running one has been going on for 18 minutes.

Anyway, I have raised a case with Tableau.

Here are some of the insights that I have built. Not adding a lot of commentary along. Just the visuals do a lot of talking. Two types of visuals are here –

  1. Historical Data View of India’s performance in terms of medals count – From 1952 to 2018
  2. Game – wise performance in terms of medals counts and overall ranking – From 2002 to 2018

Historical Data View of India’s performance in terms of medals count – From 1952 to 2018

India

Game – wise performance in terms of medals counts and overall ranking – From 2002 to 2018

Sport-wise Performance over the years