India's Gold Demand, Key Q3FY20 Results, and Top Cues in Focus Today

Fri, 31 Jan Pre-Open

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On Thursday, Indian share markets witnessed selling pressure throughout the day and ended lower.

The BSE Sensex closed lower by 285 points to end the day at 40,914. Reliance Industries and IndusInd Bank were among the top losers.

While the broader NSE Nifty ended down by 94 points to end at 12,036.

Among BSE sectoral indices, energy stocks fell the most, followed by FMCG stocks and metal stocks.

Results Corner

Bajaj Auto has reported 8.3% year-on-year (YoY) rise in its consolidated net profit at Rs 13.2 billion for the quarter ended December 2019. It had posted a net profit of Rs 12.2 billion in the corresponding quarter last year.

Total revenue from operations grew 2.7% to Rs 76,396.6 million from Rs 74,358 million in the year-ago quarter.

Tax expense for the Q3FY20 stood at Rs 4.1 billion against the Rs 4.6 billion in the year-ago quarter.

On standalone basis, the company registered a 15% YoY growth in net profit at Rs 12.6 billion while revenues increased 3% to Rs 76.4 billion.

The company's earnings before interest, tax, depreciation, and amortization (EBITDA) grew 13% to Rs 14.1 billion. Operating EBITDA margin improved sequentially by 150 bps to 18.4%.

Escorts share price has reported 9.2% increase in its net profit at Rs 1.5 billion on a YoY basis.

The company's EBITDA margins improved 89 basis points to 13%, driven by better mix and cost savings.

However, total operational revenue declined 1.3% to Rs 16.3 billion over the previous year quarter.

To know more about the company, you can read Escorts' Q3FY20 result analysis on our website.

From the Commodity Space...

India's gold demand fell 9% to 690.4 tonnes in 2019 from the previous calendar year as record domestic prices and economic slowdown dented retail purchase, the World Gold Council (WGC) said on Thursday.

As Indian gold prices jumped 25% in 2019, hitting a record high, consumption fell 9% from the previous year to 690.4 tonnes, the lowest since 2016.

However, WGC said that in 2020, gold demand in India could increase amid hopes of increased acceptance of high price level and likely economic reforms boosting consumer confidence.

Gold consumption in 2020 will likely be 700-800 tonnes, compared with 690.4 tonnes last year, said Somasundaram PR, the managing director of WGC's Indian operations. But government measures aimed at bringing transparency in bullion trading are likely to keep demand below the 10-year average of 843 tonnes, he added.

In value terms, India's gold demand rose 3% to Rs 2,17,770 crore in 2019 from Rs 2,11,860 crore in the previous year.

Gold buying in the key December quarter dropped 18% from a year earlier to an eight-year low of 194.3 tonnes.

The country's scrap supplies in 2019 jumped 37% to 119.5 tonnes, helping New Delhi to bring down net bullion imports by 14% to 646.8 tonnes, the WGC said.

Gold dealers are now awaiting the budget, which will be presented on February 1. In last year's budget, the government had raised import tax on gold to 12.5% from 10% earlier.

According to reports, the commerce ministry has sought a reduction in gold import duty to boost the jewellery sector.

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, the editor of daily premium newsletter Equitymaster Insider (requires subscription) 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...

Oil Prices Fall amid Rise in Crude Stocks

Crude oil prices fell on Thursday as alarm spread over the economic impact of the Wuhan virus in China, while a bigger-than-expected increase in US crude stocks added to the negative tone.

Prices had steadied in recent days, after a rout pushed them to three-month lows as investors tried to assess damage from the virus to economic growth and demand for crude and its products.

Crude stocks rose by more than seven times market expectations, gaining 3.5 million barrels in the week to January 24, the US Energy Information Administration (EIA) said on Wednesday.

As per the economic schedule released by Vijay Bhambwani, editor of Weekly Cash Alerts, here are the important events due later today:

• China - Manufacturing & Non-Manufacturing PMI January
• India - Infrastructure Output December
• Germany Retail Sales December

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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