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Old 3rd June 2016, 21:10   #1
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Default Interlinked: The Sensex & Commercial Vehicle Sales

Sales of commercial vehicles (CV) have been found to have links with the Sensex, bull and bear phases. This news report from Economic Times of today 3/6/2016, has established an intimate link of CV sales with the stock market rallies. A chart for the last ten years has been prepared based the CV sales and the Sensex. The news report says :

"The correlation is such that a good growth in CV sales in the previous month can be reason for as much as 40% of rise in the Sensex in the following month. Thatís the correlation we found when monthly CV sales data for the past 10 years was plotted against the Sensex line chart for the same duration. The chart showed a moderately positive relationship between CV sales and Sensex movement. Further, the graph plot showed symmetry in the movement of both the parameters. But, the impact is no way direct. Economy watchers consider commercial vehicle sales volume as a leading indicator of the economy. CVs are used for the movement of goods and labour within and outside the country and a heavy volume in CVs is a good indicator of a bustling economy."
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Old 5th June 2016, 10:29   #2
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Default Re: Interlinked: The Sensex & Commercial Vehicle Sales

Thank you for sharing this. Intuitively it sounds right that sales of commercial vehicles is somehow co-related to the economy doing well or people expecting the economy to spurt. Many years ago I started my career selling trucks on hire-purchase for Telco (now Tata Motors) and this was an accepted fact amongst the better and larger truck operators. I owe my first promotion to Rajiv Gandhi! When Rajiv Gandhi won by a landslide in December 1984 truckers expected better days and ordered more Tata 1210 trucks and pushed me from Officer to Executive (ahead lay Assist Manager, Deputy Manager, Manager and then Senior Manager...the hierarchy was endless). The then enthusiasm for the economy also led to the launch of the ubiquitous Tata 407 (though Telco had been working on it for a few years already)

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Old 8th June 2016, 10:55   #3
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Default Re: Interlinked: The Sensex & Commercial Vehicle Sales

Was always under the opinion that CV sales are directly linked to the GDP rise of the country. Even a percentage increase in GDP directly impacts the commercial vehicle sales to a certain extent.

However one has to factor in the previous years growth or de-growth which would have led to a situation of over/under capacity in the transport sector which might ultimately impact new sales. But overall GDP to CV sales are very much interlinked.

Now when we talk of Sensex to CV sales, IMO it would be again an attribute of the GDP. In general when GDP increases, the commercial activity increases leading to the companies doing well which in turn brings in FII investment into the Sensex, hence stock rise. Naturally with higher commercial activity the CV sector will boom as well!

Now over to experts!
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Old 8th June 2016, 11:31   #4
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Default Re: Interlinked: The Sensex & Commercial Vehicle Sales

Yes, this makes sense.
Sensex/Nifty/Stock markets are anticipation of times to come - good (rises) or bad (falls).

Commercial vehicles sales / capital investments by industries are also anticipation of times to come - good (increased spending) or bad (reduced spending).

Of course the anticipation of good or bad doesn't mean that it will necessarily happen - and that's why we have booms and busts and stagnations.

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Old 8th June 2016, 11:47   #5
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Default Re: Interlinked: The Sensex & Commercial Vehicle Sales

This is a very old facet which is known to most industry watchers. It is the first step in realizing the benefits from an economy upswing (whether good rains or increased industrial activity).

From various articles:
Do note that interest rates have fallen by almost 1.5% over the past 12-15 months while the decent jump in truck demand, and the large sizes of the new trucks being sold clearly indicate that something is happening in some parts of the economy (road / mining projects), if not all over

http://www.livemint.com/Politics/Vt6...c-revival.html indicates CV sales as #2 leading indicator. Others being indirect tax collection, higher industrial production, manufacturing HSBC Purchasing Managers’ Index, infra spending by the govt.

On the other hand, a similar analysis for USA indicates that the recession is likely in Q4:
http://www.forbes.com/sites/johntobe.../#11f5de57c211 etc. This index is a bit out of date since it has a few airline stocks etc when don't have the same correlation (they are more anti-oil than an overall leading indicator for the economy.
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