Sensex Ends 162 Points Lower; Power and Auto Stocks Witness Huge Selling

Fri, 3 Jan Closing

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India share markets continued to trade in the red during closing hours and ended their day on a negative note.

At the closing bell, the BSE Sensex stood lower by 162 points (down 0.4%) and the NSE Nifty stood down by 55 points (down 0.5%).

The BSE Mid Cap index ended the day down 0.5%, while the BSE Small Cap index stood flat.

Stocks in the power sector and auto sector witnessed huge selling pressure, while IT stocks were trading in the green.

The rupee was trading at 71.76 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.32% and the Shanghai Composite was down by 0.05%. The Nikkei 225 was down 0.76%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.33%. The DAX was trading down by 1.45%, while the CAC 40 stood down by 0.50%.

Speaking of Indian share markets, Indian indices have witnessed a starkly polarised situation since 2018, after the uninterrupted bull rally of 2017 entered a period of correction.

While the Sensex recovered from the correction and went on to hitting new life-time highs, the broader markets - predominantly the small and midcap stocks -haven't recovered much.

Ankit Shah has been talking about this trend since a long time. But now, he has even more elaborate data to show you how deep this trend has been.

He pulled out data on 1,638 companies listed on the NSE.

And he shares his observations in a recent edition of The 5 Minute WrapUp...

• Between 29 December 2017 and 30 December 2019, just 246 companies have witnessed gains. Together, these 246 companies added Rs 29.8 trillion worth of market capitalisation.
  
  In other words, 1,392 companies are below the levels they traded at the end of December 2017. Together, these 1,392 companies lost Rs 28.6 trillion worth of market capitalisation.
  
  So, you see the money has literally shifted from one place to another.

Even among the 246 companies that witnessed gains, the major chunk was captured by just a small list of companies.

This can be seen from the chart below...

A Very Small Group of Stocks Captured All the Gains

As you can see, the top 5 companies captured 41% of all the gains in market capitalisation over the last two years. In fact, the top 30 stocks captured more than 80% of the gains.

In short, money has been rushing to safety, into large, liquid, bluechips stocks.

Where can you look for such bluechip stocks?

You can consider the bluechip recommendations made by our Safe Stocks guru, Tanushree Banerjee. She has picked her top 7 stocks for 2020.

Also, as the divergence between the Sensex and Small cap index widens, Richa Agarwal answers why small cap rebound is just around the corner and why this could be the right opportunity to buy quality small cap stocks.

Tune in to find out more...

In the news from the commodity space, India's gold imports in 2019 fell 12% from a year ago to the lowest level in three years. This was seen as retail buying faltered in the second half after local prices rallied to a record high.

As per the numbers, India imported 831 tonnes of gold in 2019, down from 944 tonnes a year ago. In value terms, 2019 imports fell nearly 2% to US$ 31.22 billion.

Note that lower buying by the world's second biggest consumer of the precious metal could weigh on global prices that jumped 18% in 2019. It could, however, help bring down the trade deficit and support the rupee.

In global markets, gold prices have climbed to a four-month high of US$ 1,540.48 per ounce amid tensions in the Middle East.

Iranian Major General Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi al-Muhandis were killed in the air strike on their convoy at Baghdad airport.

Gold is considered a safe store of value during times of economic or political uncertainty.

What effect the middle east conflicts have on gold in the coming days remains to be seen. We will keep you updated on all the developments from this space.

In the news from the airlines sector, InterGlobe Aviation share price was in focus today as the company said a meeting of shareholders will be convened on January 29 to seek approval for certain changes in the company's articles of association.

According to a regulatory filing, an extraordinary general meeting (EGM) would be held on January 29 on the request of Rakesh Gangwal Group.

The EGM would vote on changes in the articles of association (AoA). Generally, an AoA provides the regulations for operating a company.

The meeting is being convened following request by co-promoter Rakesh Gangwal and related entities who together hold 36.64% stake in the company, the parent of the country's largest airline IndiGo.

Note that the differences between co-founders and co-promoters - Rakesh Gangwal and Rahul Bhatia - came to the fore in July 2019 after Gangwal sought market regulator Sebi's intervention to address alleged corporate governance lapses at the company.

We will keep you updated on all the developments from this space. Stay tuned.

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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