Sensex Ends Week on a High; Axis Bank Surges 9%

Fri, 27 Apr Closing

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After opening the day in green, share markets in India witnessed positive trading activity throughout the day and ended the day on a positive note. Sectoral indices traded on a mixed note, with stocks in the banking sector and stocks in the capital goods sector, leading the gains.

At the closing bell, the BSE Sensex stood higher by 256 points (up 0.7%) and the NSE Nifty closed up by 75 points (up 0.7%). The BSE Mid Cap index ended the day up 0.8%, while the BSE Small Cap index ended the day up by 0.4%.

The rupee was trading at Rs 66.72 against the US$ in the afternoon session. Oil prices were trading at US$ 68.01 at the time of writing.

Global financial markets this week closely followed the U.S.-China trade war ebb and flow. However, US and Asian shares witnessed positive activity after the leaders of North and South Korea agreed to work to remove all nuclear weapons from the Korean Peninsula and, within the year, pursue talks with the United States to declare an official end to the Korean War that ravaged the two nations from 1950 to 1953.

Asian stock markets finished in green over news of a peaceful resolution in the Korean peninsula. As of the most recent closing prices, the Hang Seng was up by 1% and the Shanghai Composite was up by 0.2%. The Nikkei 225 was up by 0.6%. Meanwhile, European markets, were trading on a positive note. The FTSE 100 was up by 0.7%, The DAX, was up by 0.8% while the CAC 40 was up by 0.4%. Whereas, the US benchmark, Dow was trading up by 1%.

In the news from commodity markets. Crude oil was trading near three year highs, on speculation that tensions in the Middle East may lead to supply disruptions, reinforcing a buy call on commodities by Goldman Sachs Group Inc.

Crude oil recorded new-highs of 2018 this week as the risk of conflict in Syria, as well as ongoing tensions between Saudi Arabia and Iranian-backed rebels in Yemen, raised concerns over supply security in the energy-rich region.

Further, investors gauged the potential of a US exit from the Iran nuclear deal.

While OPEC said its output last month fell to the lowest in a year, with worldwide inventories set to decline significantly later this year, the International Energy Agency (IEA) sees a second wave of shale revolution in the US.

Steadily Rising Crude Oil Prices

Richa Agarwal, editor of Hidden Treasure, tracks the oil and gas sector very closely. This is what she had to say about rising crude prices:

She believes it is a bearish sign for stock markets globally. At the same time, any market correction, will throw up interesting buying opportunities in small-cap stocks.

This is what she said...

• After hitting a low of US$ 30 per barrel in January 2016, prices have more than doubled to US$ 68 in April 2018.
  
  The recent news of Saudi Arabia wanting crude oil prices to touch US$ 100 per barrel doesn't help. The 2008 recession was preceded by crude oil touching US$ 150 per barrel. Any movement upwards can result in a possible downturn for the global market.
  
  While the Hidden Treasure team looks for long-term wealth creators, such macro situations can help to recommend such stocks at a bargain. The ones who keeps calm, when everyone else is losing their heads, will gain the most when the tide turns.

How this pans out remains to be seen. We will keep you updated on all the developments from this space.

Note that crude oil prices have been witnessing a rising trend of late.

However, this is not good news from India's perspective.

Back home inflation seems to be on a downward trajectory, however rising crude prices could be a threat.

As per the data released by the government, retail inflation cooled to a five-month low of 4.28% in March following a decline in food prices including vegetables. The inflation based on Consumer Price Index (CPI) was 4.44% in February.

The inflation remained above the Reserve Bank of India's (RBI) medium-term target, supporting views that monetary policy is likely to remain unchanged at the next review in early June.

The RBI, which has kept rates steady since a cut of 25 basis points in August last year, is widely expected to maintain rates at their current level in the next review due on 6 June.

Moving on to news from stocks in the banking sector. Axis Bank share price was in focus today after the bank declared results for the fourth quarter.

Notably, the private sector lender declared its first loss as it recorded unprecedented amounts of bad assets.

Provisions climbed to Rs 71.8 billion in the three months ended March from 28.1 billion the previous quarter as an additional Rs 165 billion fresh defaults were identified after the implementation of tighter regulations.

Axis has seen its non-performing loans jump more than eight times in the past three years to Rs 342.5 billion, or 6.8% of its loan book, at the end of March. bank rule changes.

For the March quarter, the bank's loans grew 18%, driven by a 23% rise in loans to retail customers. Its net interest income growth was flat in the quarter, and rose 3% for the full year leading to a net interest margin of 3.4%.

One shall note that, the RBI has tightened the bad debt resolution framework by scrapping numerous loan restructuring programmes. The RBI replaced all the schemes by the Insolvency & Bankruptcy Code (IBC).

The Mumbai-based bank reported a loss of Rs 21.9 billion, the first in data going back to 2006.

With tighter provisioning and stringent regulations, most market participants believe that the worst may be over for Axis Bank and the stock surged well over 9% in response.

Axis Bank share price ended the day up by 9%.

And here's a note from Profit Hunter:

Yesterday, the Indian stock markets ended its April futures and options (F&O) expiry. Let's have a look how the Nifty 50 Index performed during the expiry.

The index started the expiry near 10,100 level and ended above 10,600. It traded in a smooth uptrend without any significant correction to end the April expiry 5% up.

Last week, we saw the index trading near its crucial resistance level of 10,540. But the bulls were successful in pushing the index above this level. As of now, the gap area placed at 10,750 level is the immediate resistance level. If the index decisively breaks this level, we can see it finding resistance from its all-time high that is, near the 11,000 level.

On the flip side, 10,400 - 10,500 zone which was a resistance for the index on the way up will now act as a support for the index.

Nifty 50 Index Ends April Expiry 5% Up

 

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