Indian Share Markets in 2018, Capital Infusion in PSBs, and Top Stocks in Focus Today

Wed, 2 Jan Pre-Open | Monish Vora, TM Team

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On Tuesday, Indian share markets witnessed buying interest during closing hours and ended on a positive note. Gains were seen in the realty sector, telecom sector and banking sector, while metal stocks and auto stocks witnessed selling pressure.

At the closing bell on Tuesday, the BSE Sensex stood higher by 186 points (up 0.5%) and the NSE Nifty closed higher by 48 points (up 0.4%). The BSE Mid Cap index ended the day down 0.1% and the BSE Small Cap index ended the day up by 0.4%.

Top Stocks in Focus Today

From the automobiles space, Atul auto share price will be in focus today as the company yesterday posted a strong 50% growth in sales numbers for December 2018.

The company had reported 1.7% YoY growth in net profit at Rs 250 million during the first half of the financial year 2018-19.

To know more about the company, you can read Atul Auto Q2FY19 result analysis and Atul Auto annual report analysis on our website.

Maruti Suzuki share price will also be in focus today as the company missed the street estimates for December sales.

The country's largest car maker sold 1.28 lakh units in December 2018 against 1.3 lakh units sold in same month last year.

Domestic sales grew by 1.8% YoY to 1.21 lakh units, but exports fell sharply by 36.4% to 6,859 units compared to year-ago period.

Note that the company is also planning to shut its diesel engine assembly plant in Gurgaon.

As per an article in The Economic Times, the Suzuki Motor Corp. unit might either convert the diesel engine line in its Gurgaon plant to produce petrol engines or to add an assembly line for petrol engines at it plans in Manesar.

To know more about the company, you can read Maruti Suzuki Q2FY19 Result Analysis and Maruti Suzuki Annual Report on our website.

From the pharma sector, Lupin share price will be in focus as the drug maker has received approval for its Clobazam Oral Suspension, 2.5 mg/mL from the United States Food and Drug Administration (FDA).

From the banking space, Axis Bank share price will be in focus on the joining of the new managing director & CEO of the company. Shikha Sharma, the former managing director & CEO of Axis Bank retired from the services of the bank with effect from Monday. Amitabh Chaudhry, who replaced her will remain in office till December 31, 2021.

A Look Back at 2018...

The Sensex closed the year 2018 at 36,068.

A year ago, on the last trading day of 2017, the Sensex had closed at 34,057.

That's a 6% gain for the Sensex in 2018.

For equities, that's not a good enough return. Your money could have done better parked in fixed deposits.

Most investors have seen their investments diminish in value during the year.

In fact, the total market value of all listed companies on the BSE declined 5% to Rs 144.1 trillion from Rs 151.7 trillion at the end of 2017.

In other words, wealth worth Rs 7.6 trillion, which is more than the market cap of Tata Consultancy Services or Reliance Industries, was wiped out during the year.

Also, there are some interesting trends to see about how the global markets performed during 2018.

The BSE Sensex closed at 34,057 at the end of 2017. It gained 14% to hit a life-time high of 38,897 on 28 August 2018. Thereafter, the Sensex has been in correction mode through September and October. However, after hitting a year-to-date low of 33,349 in the last week of October, the Sensex has reclaimed the 35k level.

While the Sensex has shed most of its gains in 2018, it still doesn't appear so bad in Indian rupee terms. But for foreign investors, the fall in the Sensex has been worse, because they're also exposed the currency risk.

There was a difference between the performance of the Sensex and the Dollex 30 index (Sensex in US dollar terms). The trend between the Sensex and Dollex-30 diverged since February 2018.

No wonder that foreign investors have been dumping Indian stocks. Since April 2018, foreign investors have sold equities worth Rs 565.5 billion. What is worth noting is that Rs 276.2 billion worth of equities were sold in the month of October alone.

Also, to have a quick look at the key factors and events that had a major influence on the Indian stock markets in 2018, you can check out one of the recent issues of Equitymaster Insider here (requires subscription).

What About 2019?

Now as we enter the year 2019, in the latest edition of our stock market podcast, we talk about the investment strategy for 2019 and Richa Agarwal's 4 small cap stocks that we need to watch out for. Listen in to find out. Just visit SoundCloud, iTunes or Stitcher.

Govt. Kicks Off Capital Infusion in PSBs

Market participants will be tracking public sector undertaking (PSU) banks today as the government has started its capital infusion in public sector lenders.

On Monday, the government infused Rs 108.8 billion in four PSU banks including UCO bank and Syndicate bank.

Earlier this year, the government pumped in Rs 113.4 billion into five PSBs, including PNB, Allahabad Bank, Indian Overseas Bank, Andhra Bank and Corporation Bank to improve their financial health.

However, as per us, using recapitalization bonds can only act as a short-term measure to the crisis afflicting Indian public-sector banks today. Such a measure will not address the structural issue in the banking system, i.e. the poor standard of lending and poor governance system.

Our big picture editor, Vivek Kaul, talks about moral hazard risk arising out of recapitalization. He writes:

• If the government bails them around this time around, the banks know that they can count on the government bailing them out the next time around as well. And this means that they can follow fairly loose standards of lending, in order to lend money quickly.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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