Photo: Mint
Photo: Mint

Brexit deal impact: Five Indian stocks to watch out for

Stocks of Bajaj Auto, Eicher Motors, Tata Steel, Tata Motors and Motherson Sumi will be impacted by the Brexit deal

The announcement of a new Brexit deal agreed between the UK and European Union (EU) came in just before the Indian equity markets closed on Thursday. Global and domestic investors cheered the news of Britain’s departure from the EU, with benchmark Indian indices rallying to end near one-month high.

While the Sensex surged 453 points to close above the 39,000 mark at the fag end of today’s session, Nifty 50 settled 1% higher at 11,586, the highest levels for both the indices since 24 September.

Shares of Indian companies that have business exposure to the UK and Europe--Tata Motors Ltd, Eicher Motors Ltd, Bajaj Auto Ltd, Tata Steel Ltd, Bharat Forge, Mastek Ltd, Tata Elxsi Ltd and Motherson Sumi Systems Ltd--boomed in the last 30 minutes of today’s trade.

Here is a list of five major Indian stocks impacted by the Brexit deal:

Tata Motors: Shares of the auto company surged nearly 10% today as looming uncertainty around no-deal Brexit ended. Tata Motors-owned luxury carmaker brand Jaguar Land Rover had decided to suspend all manufacturing operations in the UK for a week starting 4 November. The Coventry-based company contributes almost three quarters to the consolidated revenue of Tata Motors.

Motherson Sumi: The auto-component maker has operations across Europe and is a supplier of electrical and wiring systems for automotives. Motherson Sumi is the flagship company of the $11.5 billion Samvardhana Motherson Group. Shares of the company closed up 9% as a fresh Brexit deal indicated smooth exit of Britain from the EU.

Tata Steel: The Indian steelmaker is one of Europe's leading steel producers, with steelmaking in the Netherlands and the UK, and manufacturing plants across Europe. Automotive, constructive and packaging are the key UK markets for Tata Steel. The company supplies almost 50% of UK carmakers’ steel requirements. Shares of the company ended up more than 2%.

Eicher Motors: The stock of the company rose nearly 7% after the Brexit deal announcement. The US, UK and Europe are major markets for sales of motorcycles under Eicher Motors’ brand Royal Enfield. The company has a technical centre in the UK that leads research and development of motorcycles for international markets. Royal Enfield has a technology development centre located in Chennai.

Bajaj Auto: The auto company had announced a partnership with UK-based Triumph Motorcycles in August 2017 to capture the mid-weight motorcycles market in India. Bajaj Auto also exports two and three wheelers to the Europe and a no-deal Brexit would have likely caused disruptions in the supply chain. The stock of the two-wheeler manufacturer settled 3% higher.