Sensex Opens Over 250 Points Down; Banking Stocks Under Pressure

Tue, 17 Mar 09:30 am

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Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 1.3% while the Hang Seng is down 0.8%. The Nikkei 225 is trading down by 0.5%.

Meanwhile, Wall Street suffered its biggest drop since the crash of 1987 on Monday after unprecedented steps taken by the Federal Reserve, lawmakers and the White House to slow the spread and blunt the economic hit of the coronavirus failed to restore order to markets. The Dow Jones Industrial Average fell 12.9%, the S&P 500 lost 12%. The Nasdaq Composite dropped 12.3%.

Back home, India share markets open lower. The BSE Sensex is trading down by 249 points while the NSE Nifty is trading down by 87 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.1%.

Sectoral indices are trading mixed with banking stocks and consumer durables stocks witnessing selling pressure. Metal and FMCG stocks are trading in green.

Our bluechip stock analyst at Equitymaster, Tanushree Banerjee, believes that the ongoing market crash could, in fact, be an inflection point for what she calls the irreversible Rebirth of India megatrends.

Here's what she has to say more on this...

• Companies across the globe, will seek to diversify geographic risks after this crisis.
  
  India could see a big spurt in new factory capacities and fresh fund inflows. This trend, can widen the moats of the strongest bluechips.
  
  I believe, it can also help multiply their profits 4 to 8 times over the next decade.
  
  The time is ripe for StockSelect subscribers to begin buying some of the safest bluechips, right now.
  
  There is safety in valuations as the market offers them at deeper and deeper bargains.

Just in case you need more proof, the profits of bluechips (BSE 200 companies) are currently at a decade low as can be seen in the chart below.

A Rebound in Profits Overdue?

Tanushree is recommending her subscribers, to buy stocks selectively, a few at a time, by taking partial exposures to begin with. She has already recommended 4 safe bluechips in the past month and there are several more in her watchlist. You can access them here: Here's How You Could Trade the Coronavirus Crisis Safely (requires subscription)

And if you are not a StockSelect subscriber, here's where you sign up.

In the video below, Tanushree has also explained how buying the above stocks at bargain prices is a once in a decade opportunity.

Moving on, the rupee is currently trading at 74.1 against the US$.

The Indian rupee continued its downward spiral and plunged 50 paise to 74.25 against the US dollar on Monday as concern over the economic fallout from the coronavirus pandemic outweighed the US Fed's emergency interest rate cut and the RBI's liquidity enhancing measures.

Reportedly, the fall in the domestic unit was in line with other Asian peers amid mounting fears of a coronavirus-led economic slowdown.

At the interbank foreign exchange market, the local currency opened at 74.10.

During the day, it saw a high of 74.09 and a low of 74.35 against the American currency. The domestic unit finally settled at 74.25 against the greenback, down 50 paise over its previous close.

Speaking of gloomy economy, coronavirus fears, falling markets and crude oil prices, Ajit Dayal has written an insightful piece, sharing his views in the latest edition of The Honest Truth.

Here's a snippet from the article:

• Is the meltdown over?
  
  While the unravelling of the debt excess in the US and the developed world may have some more to play out, the question on an investor's mind in India is: Is the mayhem over and what should I do next?
  
  On the face of it, there is some interesting Upside Potential, or potential profit, if you were to buy the specific stocks now and assume, they get back to their past peak levels over, say, the next 2 to 3 years.
  
  With the help of either some jaadu mantar or some good policy.
  
  But there are some "bets" I would be very cautious about: Yes Bank, Reliance and the INR, for instance.

You can read his entire article here: The Market Gets a Viral Attack.

In another news, oil prices fell below US$30 a barrel on Monday.

Brent crude settled down 11.2% at US$30.05 a barrel. The international benchmark fell as low as US$29.52 a barrel, its lowest since January 2016. US West Texas Intermediate (WTI) crude fell 9.6% to end at $28.70 a barrel, its lowest since February 2016.

In a recent article, we have written the entire timeline showing economics of falling crude oil prices. You can check the same here: All About the 30% Crash in Crude Oil - 10 Points

Going ahead, market participants are expecting crude oil prices to remain low until OPEC+ resets oil production again.

Vijay Bhambwani, editor of Weekly Cash Alerts at Equitymaster, states that at this point in time, short selling natural gas & crude oil at significantly higher levels for the coming summer are high conviction trades.

To know more about his view and positions, you can check out his recent article here: Energy Markets Get Muddy (requires subscription).

And 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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