Sensex Opens Higher Ahead of Union Budget; Automobile Stocks Rally

Fri, 1 Feb 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 0.7% while the Hang Seng is up 0.2%. The Nikkei 225 is trading up by 0.1%. Wall Street extended its rally on Thursday as strong earnings from Facebook Inc added to optimism after the Federal Reserve's dovish remarks the previous day, while market participants waited for the outcome of US-China trade talks.

Back home, India share markets opened on a firm note. The BSE Sensex is trading up by 123 points while the NSE Nifty is trading up by 38 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.4% & 0.3% respectively.

Barring metal stocks & bank stocks, all sectoral indices have opened the day in green with automobile stocks and telecom stocks witnessing maximum buying interest.

The rupee is currently trading at Rs 71.08 against the US$.

Vedanta share price plunged over 16% after the company posted a 26% drop in consolidated net profit to Rs 15.7 billion in the third quarter ended 31 December 2018 (Q3FY19) against Rs 21.1 billion in Q3FY18, hit by lower commodity prices and disruption in its copper smelter operations at Tuticorin.

Telecom stocks opened the day on a mixed note with GTL & Bharti Airtel leading the gainers. Bharti Airtel, on Thursday posted a consolidated net profit of Rs 860 million for the October-December quarter, down 27.7% compared to the preceding quarter.

This came on the back of a Rs 10.2-billion exceptional gain largely on account of deconsolidation of Airtel Payments Bank.

Before this exceptional gain, the company registered a net loss of Rs 10.4 billion, wider than Rs 9.7 billion (before exceptional gain) in the preceding quarter.

The most striking aspect during the quarter was the company losing 48 million users on account of hiking the minimum monthly recharge amount to Rs 35. These are low 2G users and the company had expected to lose around 30-40 million such users.

As a result, Bharti's total subscriber base has come down to 284 million from 332 million earlier. On the basis of subscriber number, Reliance Jio is snapping at its heels with a user base of 282 million.

The loss of low-end subscribers though did improve its Arpu a bit which is expected to improve further during the January-March quarter as the full benefit of removing such subscribers did not accrue during the quarter.

The competitive pressure on the company since the commercial launch of Reliance Jio, which has led to a tariff war, continues and was reflected in the earnings of the India business, which recorded a net loss of Rs 9.7 billion, lower than Rs 16.5 billion loss it posted in the preceding quarter.

Consolidated revenues during the quarter grew 0.5% on a sequential basis to Rs 205.2 billion. Ebitda at Rs 63.1 billion was up 0.6% compared to the preceding quarter, while margin was 30.7% against 31.1% in the preceding quarter.

Total data volume rose 20.9% on a quarter-on-quarter basis to 32,16,897 million Mbs. Data usage per customer also jumped 14.2% to 10,528 Mbs on a sequential basis.

Bharti Airtel share price opened up by 1.5%.

Moving on to the news from the economy. According to first revised estimates of GDP released by the central statistics office, the Indian economy grew at 7.2% in 2017-18, as compared to earlier estimates of 6.7%.

The provisional estimate of gross domestic product (GDP) for 2017-18 was released by the Centre on 31 May 2018, which showed real or inflation-adjusted GDP growth at 6.7%.

The revised GDP data indicates that the impact of demonetisation on India's growth wasn't as severe as it was expected, which would be a shot in the arm for the Narendra Modi-led government ahead of the crucial Lok Sabha elections in April-May.

Nominal GDP or GDP at current prices for 2017-18 has been revised to 11.3% from 10%.

Real GDP growth rate has been revised to 8.2% from 7.1% for 2016-17, while nominal GDP has been revised upwards to 11.5% from 10.8%.

In India, real GDP is considered to divulge the true growth picture of the economy. Real or inflation-adjusted GDP is usually calculated by subtracting the growth in actual or nominal GDP by the inflation rate.

The statistics office provisional estimates showed that Gross Value Added (GVA) grew 6.9% in 2017-18, driven by higher primary sector growth. It was 6.5% earlier.

GVA, which is GDP minus taxes, serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy.

Speaking of GDP growth, have a look at the latest data projecting the nominal GDP of countries by the year 2030.

India in the Pecking Order of Strongest Economies in Another Decade

As you can see in the chart, China would be by far the strongest economy in another decade. In fact, its GDP could be more than double of America's.

But that India will be a close second.

With GDP crossing 40 trillion dollars, the Indian economy will be at least a third bigger than the US.

No doubt the 40 trillion-dollar GDP will not come without some hiccups.

But once you know the stocks that could gain the most in the coming decade, you too be saying - 'Buy Indian. I am'.

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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