Cars, Rain and other Good News

With each passing month, business just keeps getting better for car makers in India.

With each passing month, business just keeps getting better for car makers in India. The robust growth of car sales in India is one of the surest indications that the country's economy is back firmly on the trajectory last seen in 2007-08, irrespective of the stock market volatility. In the month of May, India's largest car maker Maruti logged a sales growth of almost 30 per cent. Its closest homegrown rival Tata Motors did even better with a 40 per cent vroom in sales. The robust demand shows that automobile companies need not be worried about interest rates going up.

India's factory output has been growing at a scorching pace in the last six months, restoring investor confidence, and the auto sales numbers are yet another validation. Most brokerage firms have placed a 'buy' rating on stocks such as Maruti, Tata Motors and Mahindra & Mahindra. Demand for two-wheelers also soared last month. Hero Honda Motors, the biggest player in that market, clocked 15 per cent more sales while its closest rival Bajaj Auto recorded a massive 70 per cent wheelie. On the back of strong performance across sectors, the Government  last week revised the real GDP growth estimate for this year from 7.2 per cent to 7.4 per cent. HSBC Market Purchasing Managers' Index (PMI), based on a survey of 500 firms, surged to a 27-month high of 59.0 from 57.2 in April. It was the 14th consecutive month that the indicator has been above the 50 mark.

With the year's monsoon hitting the shores of Kerala pretty much on time, all seems well with the Indian economy.