Strong Start to the Week; Realty & Auto Stocks Gain

Mon, 26 Feb Closing | Karan Janani, TM Team

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian share markets finished the trading session on a strong note amid firm Asian markets after comments from a Federal Reserve official eased worries about faster rate hikes in US.

At the closing bell, the BSE Sensex closed higher by 304 points and the NSE Nifty finished higher by 92 points. The S&P BSE Mid Cap finished up by 0.7% while S&P BSE Small Cap finished up by 0.9%.

Gains were largely seen in realty stocks, auto stocks and capital goods stocks.

Asian stock markets finished broadly higher today with shares in China leading the region. The Shanghai Composite is up 1.23% while Japan's Nikkei 225 is up 1.19% and Hong Kong's Hang Seng is up 0.74%. European markets are higher today with shares in France leading the region. The CAC 40 is up 0.49% while Germany's DAX is up 0.47% and London's FTSE 100 is up 0.24%.

Rupee was trading at Rs 64.66 against the US$ in the afternoon session. Oil prices were trading at US$ 63.51 at the time of writing.

The Market cap to GDP ratio for Indian companies too is close to dangerously high levels. While this is still some way off the peak of FY-08, when it had once reached close to 150, it's relatively high.

FY17 saw this ratio reach close to 80. It is also expected to increase further given the moderate growth expectations in India's GDP for FY18. Warren Buffett once considered this as one of the best valuation metrics to gauge the markets.

Past history shows some correlation between the ratio and the share market. 2008 saw Sensex decline by 38%, when this ratio crossed the 100 mark. Also, the market has bounced back sharply when this ratio was low.

The Warren Buffett Indicator Suggests Indian Equity Market Is Overvalued

The basic assumption in this ratio is that whenever the GDP of the country grows, the market performance will reflect it. Also, when stocks do well, it can be extrapolated to assume the Indian economy is doing well.

In news from automobile sector, Hero MotoCorp has inaugurated a new state-of-the-art authorized dealership - 'Himgiri Automobiles' in Gurugram in the state Haryana. With this, the company now has three dealerships in the City.

The new dealership in Gurugram offers all the services to its customers under one roof from focused sales consulting, fully-equipped service facility to availability of spare parts.

Situated on Sohna Road, the Dealership is strategically located to cater to customers from Badshahpur, Wazirabad and Ghatta village, in addition to serving neighbouring areas of Gurugram. Hero MotoCorp's other two dealerships in Gurugram are located at Mehrauli Road and Sohna-Gurugram Road.

Meanwhile, the company's chairman wants to build Hero MotoCorp into a transportation technology company rather than just be a commuter bike maker, EV is the segment to bet on - Hero's investment of over Rs 2 billion in Ather, an electric two-wheeler startup from Bengaluru, is a promise in that direction.

Just Released: Multibagger Stocks Guide
(2018 Edition)

In this report, we reveal four proven strategies to picking multibagger stocks.

Well over a million copies of this report have already been claimed over the years.

Go ahead, grab your copy today. It's Free.

NO-SPAM PLEDGE - We will NEVER rent, sell, or give away your e-mail address to anyone for any reason. You can unsubscribe from The 5 Minute WrapUp with a few clicks. Please read our Privacy Policy & Terms Of Use.

For Hero, in the EV segment, the focus will largely be on the commuter segment. Market watchers believe that two-wheelers will help grow the EV segment - after all, sales of two-wheelers in India outpace those of cars 5:1

Hero Motocorp share price finished the day up by 1.2% on the BSE.

Moving on to news from banking sector. Oriental Bank of Commerce share price fell 10% to Rs 95.1, while Simbhaoli Sugars Ltd share price declined 16% to Rs 14.2.

The Central Bureau of Investigation (CBI) on Sunday registered a case against Simbhaoli Sugars Ltd and its top executives for causing a loss of Rs 1.09 billion to state-owned Oriental Bank of Commerce.

In the first information report (FIR), the investigative agency named the company, which is one of India's largest sugar makers, its chairman and managing director, chief executive officer, chief financial officer and directors for allegedly defrauding the bank.

This comes days after the CBI booked a Delhi-based diamond jewellery exporter for Rs 3.9 billion fraud at the Oriental Bank of Commerce (OBC).

In another development, following the fraudulent transactions worth Rs 114 billion detected at Punjab National Bank (PNB), Finance Minister Arun Jaitley has ruled out privatisation of public sector banks (PSBs) and said that the move may not find political consensus.

He also said that a lot of people have started talking of privatisation in the outcome of the PNB fraud. He pointed out that the issue of bank privatisation involves a large political consensus and also involves an amendment to the law (Bank Nationalisation Act).

Software stocks finished in red today with NIIT Ltd share price and Mphasis Ltd share price leading the losses. This comes after the Donald Trump administration tightened the norms for issuing US H-1B visa to those working in third-party sites.

The major concern with the new rules is that it could force a worker to return home after the end of each project. Nasscom President R Chandrashekhar said the new rule could make it costlier and cumbersome in managing things, leading to gaps in handling different projects by firms.

In news from pharma sector,  Sun Pharma share price is among the top losers on the bourses today after the United States Food & Drug Administration (USFDA) made three observations after inspecting its Halol, Gujarat plant.

India's largest drugmaker said that the USFDA conducted a Good Manufacturing Practices (GMP) inspection of Sun Pharmaceuticals Industries Ltd's Halol facility. At the conclusion of the inspection, the agency issued a Form 483 with three observations.

Sun Pharma finished the day down by 2.5%.

In another development, Lupin share price finished up by 1.8% after the company launched Testosterone Topical Solution, 30 mg per actuation having received an approval from the United States Food and Drug Administration (USFDA) earlier.

Testosterone Topical Solution, 30 mg per actuation had annual sales of around US$179 million in the US.

And here's a note from Profit Hunter:

Larsen and Turbo (L&T) is among the top gainer in the Nifty 50 Index - up 3.25%. Let's have a look at its chart.

The last time we reviewed the stock, it had broken above its strong resistance level of 1,260. It rallied nearly 17% after the break-out to touch a life-time high of 1,470. The 1,260 level is now the strong support for the stock. Previous resistances once broken usually act as a support on subsequent declines.

The stock corrected from its life high and found strong support near 1,275 which just shy of 1,260 support level. The rising trendline (red line) also acted as a support for the stock. The RSI indicator has also reversed after finding support from 40 level indicating change in momentum. Today, the stock is up 3.25% indicating strong buying interest in the counter.

So does this indicate we can see a new-life time high soon or this is just a pullback before the stock resumes its down move? Let's wait and watch...

L&T Bounces from Support Level

 

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

Indian Share Market Update: Top Gainers and Losers

What else is happening in the markets today? Dig in...