Sensex Opens 396 Points Higher; Realty and Healthcare Stocks Witness Buying

Wed, 19 Feb 09:30 am

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Asian stock markets are trading higher today with Chinese and Hong Kong shares witnessing buying. The Shanghai Composite is up 0.3%, while the Hang Seng is up 0.4%. The Nikkei 225 is trading up 0.9%.

Back home, India share markets have opened on a positive note. The BSE Sensex is trading up by 396 points, while the NSE Nifty is trading up by 123 points. The BSE Mid Cap index opened up by 1.2% while BSE Small Cap index opened up by 1.1%.

All sectoral indices have opened the day on a positive note with realty stocks and healthcare stocks witnessing maximum buying interest.

The rupee is currently trading at 71.56 against the US$.

In news from the economy. Moody's Investors Service has slashed India's Gross Domestic Product (GDP) growth forecast to 5.4% for 2020 and 5.8% for 2021, down from its previous projections of 6.6% and 6.7% respectively, on slower than expected economic recovery.

In its update on global macro outlook, it said India's economy has decelerated rapidly over the last 2 years and economic recovery is likely to be 'shallow'.

It added that the reduction in India's growth rate reflects domestic challenges rather than external factors.

Stating that the key to stronger economic momentum would be the revival of domestic demand and bank credit growth, Moody's said the Union Budget 2020 did not contain a significant stimulus to address the demand slump.

With a weak economy and depressed credit growth reinforcing each other, it said it is difficult to envision a quick turnaround of either, even if economic deceleration may have troughed. It noted that as similar policies in other countries have shown, tax cuts are unlikely to translate into higher consumer and business spending when risk aversion is high.

The rating agency expects additional easing by the Reserve Bank of India (RBI). However, it said if the recent rise in CPI inflation, mainly as a result of higher food prices, is seen to have second-round effects, this would make it more challenging for the central bank to cut interest rates further.

It also stated that resumption of credit growth is equally important as reviving demand, and banks have been reluctant to lend or lower lending rates despite successive rate cuts by the RBI.

Note that, the Moody's indicator, is typically very late to caution on risks. So late in fact, that now it is time to look forward to the upside.

As our co-head of research, Tanushree Banerjee says, investors who take Moody's downgrade of India too seriously, will either suffer losses or miss the bus on the upside.

Take a look at this chart.

Terrible Track Record of Rating Downgrades

Every time, Moody's has slashed India's rating below the 'stable' category, the economy has bottomed out.

And a stock market boom followed.

So, smart investors who bought stocks after Moody's rating downgrade in 1992 and 2002, created life-changing wealth for themselves.

You need to do the same today.

Here's a snippet of what she wrote in one of the editions of The 5 Minute WrapUp:

• Take advantage of the negativity in the stock market and buy the best stocks that are poised to ride India's economic recovery.
  
  The Moody's rating downgrade will not affect the Rebirth of India at all.
  
  It will also not affect my pick of the 7 best stocks in the market.
  
  The ratings downgrade could only serve my readers, like you, to buy these stocks at valuations that are favourable.
  
  And don't be in a hurry to see markets soar.
  
  Stay assured that the Moody's rating downgrade is a final indicator of an inflection in India's economic and stock market potential.
  
  It is a sign to buy.

In fact, Tanushree is counting on 7 top stocks from the Indian stock market that will benefit from what she calls the Rebirth of India.

As per her, now is the right time to buy these stocks to profit from the Rebirth of India. You can read about them here.

In the news from airlines sector. According to data released by aviation regulator DGCA, domestic passenger air traffic growth for January came in at 2.2% to 12.7 million compared to the same month in 2019.

In comparison, the growth in domestic traffic in December 2019 was 2.6% compared to December 2018.

As per the report, the passenger load factor in the month of January 2020 has shown decreasing trend compared to previous month due to end of tourist season.

The passenger load factor measures the seat capacity utilisation of the airline. The passenger load factors of Air India, SpiceJet, GoAir, IndiGo and AirAsia India declined in January 2020 as compared to December last year.

IndiGo maintained its lead position with 47.9% share of the domestic passenger market in January 2020.

SpiceJet's market share increased from 16.5% in December to 16.6% in January, giving it the number two spot, as per the data.

Airline stocks opened the day on a mixed note with Jet Airways leading the gainers.

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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