Sensex Opens 450 Points Higher; IDBI Bank Zooms 10%

Fri, 12 Mar 09:30 am

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Asian stock markets rose today following firm overnight cues from Wall Street as a further retreat in bond yields eased concerns about inflation.

The Nikkei is trading up by 1% while the Hang Seng is down 0.2%. The Shanghai Composite is trading on a flat note.

In US stock markets, Wall Street's main indexes rose to record highs on Thursday as US Treasury yields steadied and as President Joe Biden signed a US$ 1.9 trillion financial aid package to boost the economic recovery from the coronavirus pandemic.

Upbeat US economic data also added to sentiment. Weekly unemployment benefit claims dipped by 42,000 to 712,000 in the week ended March 6, the Labor Department said, the lowest level since the week ended November 7.

The tech-heavy Nasdaq climbed more than 2.5% while the Dow Jones Industrial Average ended higher by 189 points or up by 0.6%.

Back home, Indian share markets have opened on a strong note, following the trend on SGX Nifty.

Market participants will track industrial production data for January and CPI inflation data for February that are slated to be released later today.

The BSE Sensex is trading up by 488 points. Meanwhile, the NSE Nifty is trading higher by 139 points.

L&T is among the top gainers today. Bajaj Auto, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index have opened higher by 0.7% and 0.8%, respectively.

Barring FMCG stocks, all sectoral indices are trading in green with stocks in the metal sector, oil & gas sector and banking sector witnessing most of the buying interest.

Market participants are tracking NALCO share price. The company's board is scheduled to meet on March 15 to consider interim dividend for FY21.

The rupee is trading at 72.71 against the US$.

Speaking of stock markets, in his latest video for Fast Profits Daily, Brijesh Bhatia, Research Analyst at Equitymaster, talks about his favourite sector to bet on for the long term.

A few weeks ago, Brijesh did a video on energy stocks. He said these stocks are good picks for the short term and the market validated that view.

But what about the long term? Which is the best sector, long term investors should bet on? Brijesh discusses these points in the video below.

Tune in to find out more:

In news from the commodities space, gold prices edged higher today and are on course to mark their best week in seven, as easing US Treasury yields and dollar lifted the metal's appeal.

Spot gold rose 0.2% to US$ 1,724.80 per ounce. Prices are up 1.4% for the week so far, their biggest jump since the week ended January 22.

As per a leading financial daily, investors pumped Rs 4.9 billion in gold exchange-traded funds (ETFs) in February as they seem be taking advantage of the lower domestic prices caused due to declining international rates, appreciating rupee and reduction in custom duty.

The above comes following a net investment of Rs 6.3 billion in January and Rs 4.3 billion in December. Prior to this, gold ETFs had seen an outflow of Rs 1.4 billion in November, Association of Mutual Funds in India data showed.

Gold ETFs had attracted Rs 66.6 billion last year. Barring March 2020 and November 2020, such instruments had seen net inflow in the entire preceding year.

Note that gold prices have fallen to near 11-month lows in India after being in a downtrend since hitting a record high of Rs 56,200 in August.

Speaking of the precious yellow metal, 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...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best performing commodities this year to combat the fallout from the coronavirus pandemic.

Also speaking of gold, in the latest episode of Investor Hour, India's #1 trader Vijay Bhambwani talks about his new targets for gold and silver and the best long-term investment opportunity.

In the video, Vijay also discusses stock markets, the best sectors, ETFs, gold, silver, inflation, cryptos, oil and gas prices, the best investment for the long term, and a lot more.

Tune in to the below video to find out more:

Moving on to stock specific news...

IDBI Bank and Karur Vyasa Bank are among the top buzzing stocks today.

Private lender IDBI Bank is out of prompt corrective action (PCA) after improving its finances and credit profile, the Reserve Bank of India (RBI) said on Wednesday.

This eases the rules for the lender to expand business. This also sets the stage for strategic divestment by the Government of India, which holds 45.48% stake.

The RBI in a statement said its board for financial supervision had reviewed the performance of IDBI Bank at its meeting on February 18. According to published results for the quarter ended December 31, 2020, the bank is not in breach of the PCA parameters on regulatory capital, net non-performing assets (NPAs), and leverage ratio.

IDBI Bank had been under the PCA framework since 2017. The PCA regime places curbs on big-ticket lending and expenditure and calls for a plan for turnaround.

The bank has furnished a written commitment saying it would comply with the norms of minimum regulatory capital, net NPAs, and leverage ratio on an ongoing basis.

As per an article in a leading financial daily, IDBI Bank exit from central bank purgatory has raised hopes that the remaining three banks under PCA could be next in line for similar relief, having achieved parameters to justify their exit.

The three banks under PCA - Indian Overseas Bank (IOB), UCO Bank and Central Bank of India - have reported net non-performing assets (NPAs) below levels that trigger PCA.

While IOB was placed under PCA in 2015, the other two joined two years later.

IDBI Bank share price has opened the day up by 12%.

In other news from the banking sector, Karur Vysya Bank, the leading private sector bank, and Cholamandalam Investment, the financial services arm of the Murugappa Group, jointly announced that they have successfully launched co-lending business in partnership.

Reports state that Co-lending business will significantly help Cholamandalam and Karur Vysya Bank to expand their reach to new customer segments across the country where Cholamandalam has a stronger presence to target high value loan segments such as construction equipment and commercial vehicles.

Karur Vyasa Bank share price has opened the day up by 0.5%.

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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