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Sensex Ends 311 Points Lower; Consumer Durables and Energy Stocks Witness Selling
Mon, 18 Feb Closing | Monish Vora, TM Team

Indian share markets witnessed selling pressure throughout the day and ended their trading session lower. Barring telecom sector and realty sector, all sectoral indices ended on a negative note with energy stocks, consumer durables stocks, and FMCG stocks losing the most.

At the closing bell, the BSE Sensex stood lower by 311 points (down 0.9%) and the NSE Nifty closed down by 83 points (down 0.8%). The BSE Mid Cap index and the BSE Small Cap index ended the day down by 1%.

Speaking of the Indian share markets, note that while the Sensex is below its all-time high level of August 2018, it is still above the level it traded a year ago.

And if you increase the time frame to five years, you will realize that the Sensex has gained about 73%, compounding at an annual rate of 11.6% (excluding dividends).

And how has the valuation of the index has moved over the last five years?

The chart below shows how the Sensex price to earnings ratio has moved over the last five years...

The Sensex Is Far from a Bargain Yet

Here's what Ankit Shah wrote about this in today's edition of The 5 Minute WrapUp...

  • As you can see, the Sensex price to earnings ratio has mostly been in a rising trend over the last five years, except some intermittent declines.

    So, looking at the Sensex valuations, the markets don't appear attractively priced right now. But as I've mentioned time and again, the Sensex tells a very a selective, skewed story of just the 30 largest companies.

    It does not reflect the conditions of the broader markets, which have witnessed quite a tumultuous ride. Consequently, the rest of the markets also have more attractive buying opportunities than the Sensex companies.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up 1.6% and the Shanghai Composite was up by 2.7%. The Nikkei 225 was up 1.8%.

The rupee was trading at 71.38 against the US$.

The domestic currency has slumped 2.4% since the end of December, on optimism over US-China trade talks.

As per an article in The Economic Times, the rupee's losses have deepened in recent days amid escalating tensions between India and Pakistan following a terrorist attack in Kashmir last week.

Here's an excerpt from the article:

  • India's rupee has gone from being the best-performing Asian currency last quarter to the worst this year as rising crude prices and tensions over Kashmir weigh on sentiment.

    Crude oil has surged more than 20% this year as Saudi Arabia and Russia pledged to expand their output cuts and on concerns US sanctions against Venezuela and Iran will exacerbate a tightening of supply.

Moving on, market participants were tracking Dish TV share price. According to reports, Telecom Regulatory Authority of India's (TRAI's) new rules for cable and DTH operators will reduce NCF burden on subscribers.

Shares of the company gained around 13% in early trade today on back of the above news. The stock of the country's largest direct-to-home (DTH) company was trading at a one-month high. Dish TV has zoomed 93% from its January 28, 2019 low of Rs 19.25.

Last month, shares of the company had touched 10-year lows driven by promoters' pledge and media reports that suggested a link which emerged between Essel Group and a company being probed for suspected demonetization deposits.

Dish TV share price ended the day up by 5.6%.

In the news from the pharma space, Dr Reddy's share price witnessed buying interest today. The pharma major received inspection closure report for its Duvvada facility in Andhra Pradesh from the US health regulator.

Shares of the company gained around 5% on back of the above news.

The company also received a written communication from the United States Food and Drug Administration (USFDA) about the issuance of establishment inspection report (EIR) for FTO VII, the formulations manufacturing facility at Duvvada, Visakhapatnam.

According to reports, the USFDA has concluded that this inspection is 'closed' and has determined the inspection classification of this facility as voluntary action initiated.

Last week, shares of the company witnessed selling pressure on reports that the company's formulations manufacturing plant 3 at Bachupally, Hyderabad had been inspected by the US Food & Drug Administration (USFDA).

Reportedly, it was issued a Form 483 with 11 observations, out of which four are repeat observations. The observations are around lack of thorough investigations, written records lacking details, employees not being trained and lack of infra.

Shares of the company fell nearly 30% on back of the above news.

Dr. Reddy's share price ended the day up by 0.5%.

To know more about the company, you can read Dr Reddy's latest Result Analysis on our website.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary


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