Sensex Opens Over 450 Points Up; Metal Stocks Rally

Tue, 7 Jan 09:30 am

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.3% while the Hang Seng is up 0.6%. The Nikkei 225 is trading up by 1.4%. The US markets closed higher yesterday, rebounding from losses on January 3 as investors brushed aside worries about increased tensions in the Middle East and shares of Alphabet and other internet names gained.

Back home, India share markets opened on a positive note. The BSE Sensex is trading up by 453 points while the NSE Nifty is trading up by 127 points. The BSE Mid Cap index opened up by 1.1% and BSE Small Cap index opened the day up by 1%.

Except IT stocks, all sectoral indices have opened the day in green with banking stocks and metal stocks witnessing maximum buying interest.

The rupee is currently trading at 71.76 against the US$.

In the news from the commodities space. Gold prices in India jumped over 2% yesterday to record levels amid a rush to invest in safe-haven assets globally as well as a steep fall in the rupee, dampening demand for the precious metal in the world's second-biggest consumer.

Gold futures hit an all-time high of 41,096 rupees (US$570.1) per 10 grams, taking their gains to more than 5% in 2020 after rallying nearly 25% in 2019.

Speaking of gold, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

• "In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment."

Meanwhile, Vijay Bhambwani talks about how gold has been relied upon by humankind for 3000 years in one of his videos.

If you consider street inflation, your fixed deposits are giving negative yields. In times like these, Vijay considers gold as a safe haven.

So, is it the time to buy gold?

Tune in to find out...

Moving on to the news from the economy. India's services sector activity extended its gaining momentum in the month of December, aided by faster increase in sales, output and employment.

As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index surged to 53.3 in December from 52.7 in November. Further, the Nikkei India Composite PMI Output Index, which measures both manufacturing and services also rose from 52.7 in November to 53.7 in December.

In the reported month, total sales expanded for the third consecutive month and at the quickest pace since October 2016.

Further, the upturn in total new work was achieved with the support of international markets, with services exports rising for the tenth straight month in December.

Although moderate, the pace of growth accelerated to the fastest since September.

Service providers continued to hire extra staff in December, amid reports of new business growth. Employment increased for the twenty-eighth month in succession and at a rate that, although modest, was the quickest since August.

However, inflationary pressures intensified, with the fastest rise in input costs for almost seven years pushing output charge inflation to a 22-month high.

Meanwhile, Indian services companies expect marketing efforts and favourable economic conditions to boost business activity during 2020.

Despite rising to a four-month high, the overall level of positive sentiment remained below its long-run average.

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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