Sensex Ends Marginally Lower; Banking and Finance Stocks Witness Huge Selling

Mon, 11 May Closing

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After opening the day on a strong note, Indian share markets witnessed selling pressure during closing hours today and ended marginally lower.

Benchmark indices gave up early gains and slipped into the red during the last hour of trading.

Indian share markets surged in early trade today, backed by strong global cues as investors shook off weak economic data and focused on the upcoming earnings season.

Buying interest was also seen as investors were anticipating positive outcome from PM Modi's meet with all the Chief Ministers today.

Meanwhile, finance minister Nirmala Sitharaman's discussion with PSU banks' chiefs, which was supposed to take place today, has been postponed for later this week.

Speculations were that FM Sitharaman was about to review issues such as credit flow to key sectors like MSMEs and NBFCs, rate transmission to borrowers, and progress under the targeted long-term repo operations (TLTRO) before the second fiscal stimulus package is released.

At the closing bell, the BSE Sensex stood lower by 81 points and the NSE Nifty closed down by 12 points.

The BSE Mid Cap index ended the day up by 0.7%, while the BSE Small Cap index ended down by 0.1%.

Sectoral indices ended on a mixed note with stocks in the banking sector and finance sector witnessing selling pressure, while automobile stocks witnessed buying interest.

Asian stock markets ended on a positive note today as more countries prepared to reopen businesses from lockdown and tracking positive cues from Wall Street.

As of the most recent closing prices, the Hang Seng was up 1.5%, while the Shanghai Composite ended on a flat note. Japan's Nikkei ended 1.1% higher at 20,391, its highest closing since March 6.

European stock markets and US index futures were trading lower today as investors weighed moves across the globe to relax restrictions for the coronavirus.

The rupee is trading at 75.65 against the US$.

Speaking of the current stock market scenario, after a sharp rally in the past few weeks, the markets have turned volatile again.

Vijay Bhambwani, editor of Weekly Cash Alerts, has recorded a video about when he expects the stock market to bottom out.

You can check the same here - This is When the Stock Market Will Bottom Out

Moving on, market participants were tracking Sonata Software share price, Godrej Properties share price and Piramal Enterprises share price as these companies announced their March quarter results (Q4FY20) today.

You can read our recently released Q4FY20 results of other companies here: Ambuja Cement, IndusInd Bank, Axis Bank, Tech Mahindra, Reliance Industries, Marico, Kansai Nerolac, NIIT Technologies, Persistent Systems, SKF India.

In news from the commodity space, despite positive global rates, gold prices in India fell today.

Gold June futures on Multi Commodity Exchange (MCX) fell 0.2% to Rs 45,673 per 10 grams.

In global markets, gold prices were higher, holding above key US$ 1,700 per ounce level.

Despite firmer equities and a stronger dollar, gold held firm on worries about a new wave of coronavirus infections as many countries are gradually reopening their economies.

Meanwhile, the second tranche of government of India's gold bonds of this fiscal year opened for subscription today. The subscription will close on May 15.

The price of per gram of gold has been fixed at Rs 4,590 while those applying online and making payment through digital mode will get a discount of Rs 50 per gram.

Speaking of gold, 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...

Gold Has Been a Shining Long-Term Investment

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

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

• "In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment."

Meanwhile, Apurva Sheth, lead chartist at Equitymaster, talks about a reliable investing signal, which is indicating that gold prices will go higher.

Tune in to his video here...

Moving on to news from the automobile sector, automobile stocks witnessed buying interest today.

Shares of Hero MotoCorp surged over 7% today after the company said it has resumed operations across 1,500 touch-points, including authorised dealerships, across the country.

The country's largest two-wheeler maker said that these outlets contribute to around 30% of the company's total domestic retail sales.

In a statement, the company said around 10,000 units of motorcycles and scooters have already been sold since the reopening of these customer touch-points.

The company also commenced vehicle dispatches from its manufacturing facilities for the current fiscal year on Thursday, May 7.

Last month, there were no vehicles manufactured and dispatched to dealers. The company reported zero sales across domestic and overseas markets.

Apart from Hero MotoCorp, shares of Tata Motors rallied over 14% after reports said that Jaguar Land Rover had restored three-fourth of its budgeted production in China.

As per a leading financial daily, with lockdown measures easing in China all of its retailers are now open and sales are recovering.

Shares of Ashok Leyland, Maruti Suzuki, Bajaj Auto and Mahindra & Mahindra also gained in the range of 4-8%.

Tracking auto stocks, auto ancillary and tyre stocks also advanced. Bharat Forge zoomed 15%, while Motherson Sumi surged 10%.

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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