Sensex Ends 192 Points Lower; IT and Energy Stocks Witness Selling

Thu, 4 Apr Closing

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   09:30 am   

   12:30 pm   

India share markets witnessed selling pressure during closing hours and ended their trading session on a negative note.

At the closing bell, the BSE Sensex stood lower by 192 points (down 0.5%) and the NSE Nifty closed down by 46 points (down 0.4%). The BSE Mid Cap index ended the day down 0.1%, while the BSE Small Cap index ended the day down 0.3%.

Sectoral indices ended in the red with stocks in the IT sector and energy sector witnessing most of the selling pressure.

The rupee was trading at 69.03 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was down by 0.2% and the Shanghai Composite was up by 0.9%. The Nikkei 225 was up 0.05%.

European markets were trading on a negative note. The FTSE 100 was down by 0.58%. The DAX was trading down by 0.01%, while the CAC 40 was down by 0.3%.

Speaking of the general mood in Indian stock markets these days, a lot of market participants are playing the prediction game ahead of the elections.

A common theme is to sit on cash to escape the volatility ahead of the upcoming elections. In case there is an unexpected event, you can then get in post the correction.

But does timing the market work?

Not really, if you see the market performance in the year of the past three national elections (2004,2009 and 2014).

Downside of Timing The Stock Market

Looking at the returns in the above chart, staying out of the market to escape volatility would have been a costly affair every time.

The market gave above average returns in all three of those years.

This does not mean one can expect the same in the future.

But there's one thing for sure. Predicting short-term directions of the market is a futile and many a times a costly affair.

That's why we believe in picking safe stocks when they are actually 'safe' i.e. during such times of high pessimism and uncertainty.

In the news from the macroeconomic space, Finance Minister Arun Jaitley today said that if re-elected, the government would continue with fiscal consolidation and pursue policies to enable further reduction in interest rates.

This came as the central bank cut its benchmark interest rate by 25 basis points today.

RBI's monetary policy committee (MPC), led by Governor Shaktikanta Das, announced a 25 basis points cut in the short-term lending rate, also known as repo or repurchase rate, in its first bi-monthly rate review of financial year 2019-20.

The repo rate now stands at 6%.

This was the second back-to-back rate cut by the six-member MPC ever since Das was appointed governor and four out of six MPC members voted in favor of rate cut. The move also makes India the only country in Asia to have cut interest rates twice in three months.

Despite the central bank's continued open market operations (OMOs) and the dollar-rupee swap, systemic liquidity as of March-end was in deficit at Rs 400 billion. The tightness in liquidity was visible in high credit-deposit ratios and elevated corporate bond spreads.

Speaking of RBI's policy, in 2016, the RBI adopted an inflation target of 4% (+/-2%) for next five years under the monetary policy framework.

However, since August last year, inflation has stayed below RBI's target of 4%.

Here's what Sarvajeet wrote about it in one of the editions of The 5 Minute WrapUp...

• In December, CPI-based retail inflation declined to an 18-month low of 2.2%.
  
  Currently, the RBI's policy stance was 'calibrated tightening'.
  
  But with the recent inflation data, the MPC may change its monetary stance to 'neutral', even if it does not cut the repo rate.

In the news from the banking sector, Yes Bank share price was in focus today after news reports suggested that the lender is planning to raise funds through a share sale.

The report further added that bank's new MD and CEO Ravneet Gill and his team have met over a two dozen investors, including FIIs, DIIs and private equity players in the last few weeks.

From the IT sector, Wipro share price was also in focus today. The stock of the company witnessed selling pressure after it was reported that the company lost SAP maintenance project from the sports shoe and apparel maker Nike.

As per the news, Wipro lost the SAP maintenance project after a delay in implementation of the business software for Nike. Some analysts are pegging the deal size at between US$ 10 million and US$ 40 million.

In the news from the IPO space, public sector firm Rail Vikas Nigam's (RVNL) initial public offer was subscribed 1.77 times on the last day of the offer on Wednesday.

As per the data, qualified institutional buyers (QIBs) quota was subscribed 1.36 times, Non-institutional investors (NII) 0.80 times and retail 2.78 times.

RVNL will be the third rail PSU to be listed after Rites share price and Ircon International share price.

Incorporated in 2003 by the Ministry of Railways, Rail Vikas Nigam Ltd (RVNL) is a wholly-owned government company, founded as a project executing agency working for and on behalf of the Ministry of Railways.

The company is in the business of executing all types of railway projects including new lines, doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges, construction of cable stayed bridges, institution buildings, etc.

It goes without saying that the company's key client is the Indian Railways. The other clients include various central and state government ministries, departments, and public-sector undertakings.

Ankit Shah has shared the detailed note of the IPO. You can read it here.

Speaking of IPOs, we at Equitymaster believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

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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