Sensex Tumbles 600 Points Tracking Weak Global Cues; Tata Motors & ONGC Fall 5%

Fri, 19 Mar 09:30 am

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Asian stock markets weakened today after US shares fell from a record and Treasury yields touched the highest levels in more than a year as the Federal Reserve's tolerant stance on inflation unnerved investors.

The Nikkei is trading down by 1% while the Hang Seng is down 1.4%. The Shanghai Composite is trading lower by 1.1%.

Market participants are now bracing for the outcome of a Bank of Japan policy meeting where it is widely expected to loosen its control of bond yields and trim buying of ETFs, tweaks aimed at making the stimulus package more sustainable.

In US stock markets, Wall Street indices ended sharply lower on Thursday as Treasury yields extended recent gains, igniting another drop in technology stocks.

The Nasdaq declined by 3% in its worst day in three weeks. The Dow Jones Industrial Average fell by 0.5% after rising earlier in the session to a fresh record intraday high.

Back home, Indian share markets have opened on a negative note, following the trend on SGX Nifty and amid weak signals from Asian markets.

Market participants will track shares of Easy Trip Planners as the shares will list on the bourses today. The IPO that was subscribed 159 times was quoting in the grey market at a 70% premium, as per unlisted market watchers.

The BSE Sensex is trading down by 587 points. Meanwhile, the NSE Nifty is trading lower by 196 points.

Kotak Mahindra Bank is among the top gainers today. ONGC, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened down by 1.6%. The BSE Small Cap index is trading lower by 2%.

All sectoral indices are trading in red with stocks in the automobile sector and realty sector witnessing most of the selling pressure.

Shares of Indian Energy Exchange hit their 52-week high today.

The rupee is trading at 72.64 against the US$.

In news from the commodity space, gold prices fell today, pressured by a surge in US Treasury yields and a rebound in the dollar, but the metal's jump to a two-week high in the previous session set it on track to record a small weekly gain.

Gold prices for the latest contract on MCX are trading down by 0.1% at Rs 44,924 per 10 grams.

Among gold ETFs, UTI Gold ETF and IDBI Gold ETF were among the top gainers today.

Note that gold prices have fallen as much as 20% from the recent highs. Prices have fallen from a high of Rs 56,191 in August 2020 to a low of Rs 44,150 in the first week of March 2021.

That said, let us look at 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.

Even with the recent volatility in prices, gold remains one of the best performing commodities this year to combat the fallout from the coronavirus pandemic.

Many gold bulls are doubting the long term potential of gold as an investment.

In one of his videos for Fast Profits Daily, India's #1 trader Vijay Bhambwani talks about why you need to seriously consider buying gold now for the long term.

In the video, Vijay talks about the long term potential of gold and explains why it's a good time to consider buying the yellow metal.

In latest developments from the IPO space...

As per an article in a leading financial daily, Adani Wilmar has hired investment banks and legal advisers to start work on its initial share sale that could see the owner of the Fortune brand of edible oils raise as much as Rs 50 billion.

As per the article, investment banks JP Morgan and Kotak Mahindra Capital have been hired to manage the initial public offer (IPO).

The equal joint venture (JV) between Adani Enterprises and Wilmar International is looking to raise funds through the sale of new shares and the shares held by the JV partners.

A successful IPO will make this the seventh Adani group company to be listed on the Indian bourses. Other listed entities include Adani Enterprises, Adani Ports and SEZ, Adani Transmission, Adani Power, Adani Total Gas and Adani Green Energy.

For the nine months ended 31 December, Adani Wilmar reported an 18% increase in revenue to Rs 264.9 billion.

Adani Wilmar has the largest range of edible oils comprising soya bean, sunflower, mustard and rice bran, among others. Its Fortune brand of oil has around 20% market share in India.

The company owns more than 40 units that cumulatively translate to a refining capacity of over 16,800 tonnes per day, a seed-crushing capacity of 6,000 tonnes a day and a packaging capacity of 12,900 tonnes per day, according to its website.

In other news, the IPO by Nazara Technologies, a Rakesh Jhunjhunwala-backed mobile gaming company, saw its IPO attracting 10.6 times bids on 18 March, day 2 of the bidding process.

The issue received bids for 3,08,13,731 shares by 5:00 pm yesterday, compared with the issue size of 29,20,997 shares.

The IPO is an offer for share (OFS) of 5.29 million shares being sold in the price band of Rs 1,100 to Rs 1,101 per equity share, representing 16.7% stake in the company.

Ahead of its IPO, the company allotted Rs 2.6 billion worth shares to 43 anchor investors at Rs 1,101 per piece.

To know more, you can read our IPO analysis of the company here: HYPERLINK "https://www.equitymaster.com/research-it/ipo/detail.asp?story=5&date=3/17/2021&title=Nazara-Technologies-IPO&utm_source=TM&utm_medium=website&utm_campaign=MCOM&utm_content=market-commentary" \t "_blank"Nazara Technologies IPO: Should You Apply? (requires subscription)

Speaking of IPOs, In his latest video, co-head of Research at Equitymaster Rahul Shah discusses whether investing in the recently concluded Kalyan Jewellers IPO makes sense from a long term perspective.

You can watch the same here: Kalyan Jewellers IPO: An Honest View

Moving on to stock specific news...

Insurance stocks are among the top buzzing stocks today.

The Rajya Sabha on March 18 passed the bill to hike foreign direct investment (FDI) in the insurance sector to 74% from current 49%.

With the Insurance (Amendment) Bill, 2021, passed in Rajya Sabha, majority of key management persons and directors on the board would be Indians.

The new structure allows at least 50% of directors to be independent directors, while specified percentage of profits being retained as a general reserve.

On the issue over control, the Union Finance Minister Nirmala Sitharaman said, "control means right to appoint majority of directors and key management to be resident Indians. Specific percentage of profits to be retained as general reserve. Laws of the land fairly mature, no one can kick it away and make us watch."

Sitharaman clearly mentioned that no insurer shall directly or indirectly invest funds of policy holders outside India. Apart from this, the Finance Minister said that there will be a good watch on how insurance firms' decisions will be taken.

In 2015, Narendra Modi-led government hiked the FDI cap in the insurance sector from 26% to 49%, stating that the move would improve life insurance penetration in the country.

Among insurance stocks, ICICI Lombard General Insurance has opened down by 1.1% while shares of SBI Life Insurance are trading up by 0.3%.

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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