5 Reasons Why Sensex Fell 1.9%, IMF on Indian Economy Growth in FY21, and Buzzing Stocks Today

Thu, 28 Jan Pre-Open

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Indian share markets witnessed heavy selling pressure yesterday despite the US administration saying it would bring a stimulus package even without the opposition's support.

Both benchmarks, Sensex and Nifty gave up their entire gains of 2021.

At the closing bell yesterday, the BSE Sensex stood lower by 938 points. Meanwhile, the NSE Nifty ended down by 271 points.

Axis Bank and Titan were among the top losers.

The BSE Midcap index ended down by 1.4%. The BSE Smallcap index ended lower by 0.5%.

On the sectoral front, metal stocks, banking stocks and finance stocks were among the hardest hit.

Gold prices were trading down by 0.6% at Rs 48,844 per 10 grams at the time of closing stock market hours yesterday.

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Top 5 Factors Why Indian Stock Markets Plunged Yesterday

Pre-Budget Nervousness: Pre-Budget nervousness and broader profit-taking have been attributed for the current round of selloff. Reports also state that locking up of large sums in the recent IPOs have also led to this selloff.

FIIs Turn Bearish: Foreign institutional investors (FIIs) have turned bearish on Indian share markets and have started to book profits. On January 25, FIIs net sold shares worth Rs 7.7 billion in the Indian equity market while on January 22 they sold shares worth Rs 6.4 billion.

However, so far in the month of January they have been net buyers of Rs 193.4 billion, data from NSDL showed.

US Federal Reserve Meeting: Nervousness was also seen as the US central bank was to announce the verdict of its two-day policy meeting, and consensus was that it will stand pat on policy.

Weak Global Cues: Asian and European stock markets were mixed yesterday as investors were cautious ahead of US Fed meet outcome while uncertainty around US stimulus also weighed on sentiment.

Sectoral Indices Bleed: Banking and finance stocks witnessed huge selling pressure yesterday with the Nifty Bank index plunging more than 1,000 points in intraday trade.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Top Stocks in Focus Today

GAIL will be among the top buzzing stocks today.

State-owned gas utility GAIL (India) is planning to launch an InvIT of its two gas pipelines between Dahej and Bengaluru ahead of a proposed splitting of the pipeline business from the gas marketing function.

Reportedly, the nation's top gas marketing and transportation firm plans to monetise Dahej-Uran-Panvel-Dabhol pipeline and Dabhol-Bengaluru pipeline by setting up an Infrastructure Investment Trust (InvIT).

InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual or institutional investors in infrastructure to earn a small portion of the income as return.

Larsen and Toubro (L&T) share price will also be in focus as the company reported its highest-ever fresh order intake in a quarter, for the quarter ended December, at Rs 732.3 billion, a jump of 76% year-on-year (YoY) while its order book stood at a historic high of Rs 3,130 billion.

The performance was backed by the company winning some big marquee orders in the infrastructure segment.

New orders included large wins in High-Speed Rail Corridor, large orders in the hydrocarbon sector, and also large equipment supplies order in the construction and mining business. International orders during the quarter constituted 14% of the total order inflow, with 86% of orders coming in from the domestic market.

Market participants will also track Adani Ports & Special Economic Zone share price. The company, which is the largest port operator in the country, is in the international debt market with a benchmark issue to raise at least US$ 500 million. This is the third large bond sale by domestic issuers after Exim Bank's US$ 1 billion issue at record low prices in the first week of the month followed by the State Bank of India (SBI) in the second week with a US$ 6 billion sale.

The company will use the proceeds from the issue primarily for refinancing the early redemption of its dollar bonds due in 2022.

The highly leveraged Adani Group is on massive expansion mostly using debt. In July 2020, the company had raised $750 billion and in December another $300 million, to retire some of its higher cost debt.

The issue has been rated BBB- by Fitch and Baa3 by Moody's.

IMF Pegs Contraction in India's Economy at 8% in FY21

In news from the economic space...

The International Monetary Fund (IMF) has pegged contraction in India's economy at 8% in the current financial year, higher than the 7.7% decline projected by the government's advance estimates.

However, it expects a growth rate of 11.5% in the next financial year before slowing to 6.8% in 2022-23, making India regain the tag of the fastest-growing large economy in the world in both the years.

In the World Economic Outlook released on Tuesday, the IMF said the second-quarter (Q2) gross domestic product numbers for India surprised it on the upside. India's economy fell by 7.5% in the quarter, while most experts had expected the contraction to be in double digits.

IMF was also surprised by the growth numbers for Australia, the euro area, Japan, Korea, New Zealand, Turkey, and the United States for Q2.

The IMF had earlier expected India's GDP to decline by 10.3% in FY21. However, the second-quarter numbers helped it revise the projection.

The IMF projected the global growth contraction for 2020 at 3.5%, 0.9 percentage point less than projected in the previous forecast, reflecting stronger-than-expected momentum in the second half of 2020.

The growth numbers for the next financial year may have implications for the Budget, which will be tabled in Parliament in less than a week.

Speaking of the Budget, in one of his videos for Fast Profits Daily, Vijay Bhambwani talks about the Union Budget 2021.

In the video, Vijay cover the sectors which would basically see the highest amount of expectation, buying and selling momentum.

Which stocks can you expect to move pre- and post-budget?

Tune in to the video to find out more:

And 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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