Indian Indices Extend Losses; Infosys, IndusInd Bank & Tech Mahindra Fall 4%

Thu, 14 May 12:30 pm | Monish Vora, TM Team

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Share markets in India have extended early losses and are presently trading deep in the red.

Benchmark indices edged lower today as optimism over the economic package announced by the government yesterday was offset by the selloff in global markets.

Asian equities slipped today following another selloff on Wall Street as US Federal Reserve chief Jerome Powell warned of a "highly uncertain" outlook for the economy, adding that lawmakers might have to provide even more stimulus on top of the US$ 3 trillion already declared.

Further, World Health Organization's warning saying that the virus "may never go away" dampened investor sentiments.

Barring FMCG sector, all sectoral indices are trading on a negative note with stocks in the IT sector and banking sector witnessing most of the selling pressure.

The BSE Sensex is trading down by 651 points while the NSE Nifty is trading down by 172 points.

The BSE Mid Cap index is trading on a flat note, while the BSE Small Cap index is trading down by 0.3%.

The rupee is trading at 75.43 against the US$.

Gold prices are currently trading up by 0.4% at Rs 46,154.

Note that the coronavirus impact has shaken markets worldwide. For the BSE Sensex, FY20 was the second worst year post FY08, the year of the global financial crisis.

Good Time to Start Investing Now?

Naturally, there is an atmosphere of fear all round.

Is it time to sell stocks now? Will the correction get worse?

History has shown that after years like the one we had just now, the next 3 years are good for the markets. In fact, these corrections are the rare times when you find businesses with solid fundamentals at reasonable valuations.

If you can find good businesses that can survive the current crisis, you will do well in the long run.

Meanwhile, in the video below, Richa Agarwal, editor of our premium smallcap service Hidden Treasure, talks about robust smallcap businesses that are not just resilient but likely to emerge stronger from the coronavirus crisis.

Tune in now...

Moving on, market participants are tracking Biocon share price, Escorts share price, and Indiabulls Real Estate share price as these companies are scheduled to announce their March quarter results (Q4FY20) later today.

In news from the power sector, shares of electric utilities and power finance companies are in focus today.

Shares of Adani Power, Torrent Power, Indian Energy Exchange and CESC are trading up in the range of 3-5%.

On Wednesday, Finance Minister Nirmala Sitharaman announced a special liquidity infusion scheme for the power distribution sector, through which it is looking to infuse around Rs 900 billion in the distribution companies (DISCOMs).

FM Nirmala Sitharaman said Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse liquidity in the DISCOMs to the extent of Rs 900 billion in two equal instalments. This amount will be used to pay their dues to transmission and generation firms.

Reportedly, the dues of DISCOMs to power generation and transmission firms are to the tune of Rs 940 billion.

The government also noted that the disbursement of loans would be against state guarantees. In addition, the disbursal would be related to specific measures such as DISCOMs providing facility for digital payments, liquidation of state government dues to DISCOMs, and reduction in financial and operational losses of DISCOMs.

FM Nirmala Sitharaman will address the media today at 4 PM in the second phase of announcements on government's Rs 20 trillion package.

What effects this liquidity infusion has on the power sector and DISCOMs remains to be seen. Stay tuned for more updates from this space.

Moving on to news from the pharma sector, Ipca Labs share price and Torrent Pharma share price are witnessing buying interest today.

Morgan Stanley Capital International said it will add six stocks in its MSCI India Index, and remove five scrips from the same.

The six stocks include Abbott India, Ipca Laboratories, Jubilant Foodworks, Power Finance Corporation, Tata Consumer Products and Torrent Pharma.

On the other hand, Ashok Leyland, Bank of Baroda, Cummins India, Mahindra & Mahindra Financial Services and Tata Power Company will be removed from the index.

In other news, shares of Syngene International gained 5% intraday today after the company reported a 24% year on year (YoY) growth in EBITDA (earnings before interest, taxes, depreciation and amortization) at Rs 2.3 billion in Q4FY20.

EBITDA margin, too, expanded by 300 basis points to 36% from 33% in year ago quarter.

The company posted quarterly revenue of Rs 6.3 billion, a jump of 13% YoY from the corresponding quarter last year, when it had posted a revenue of Rs 5.6 billion.

The company's profit after tax rose 20% to Rs 1.2 billion as against last year's profit of Rs 1 billion.

Reportedly, Q4FY20's performance was driven by strong growth in its discovery and development services divisions. During the quarter, the company commissioned a new research facility at Biocon Park in Bengaluru.

The company further said it has successfully cleared a USFDA inspection of its small molecule bioanalytical laboratory within the clinical development unit with no observations or formal discussion points.

Syngene International share price is presently trading up by 2.2%.

Speaking of the pharma sector, in December 2019, co-head of Research at Equitymaster, Tanushree Banerjee had predicted that pharma could be the sector to see a big rebound in 2020.

And rightly so, most pharma companies have re-emerged as the safer bets for investors in the ongoing market turmoil. Last month, the Indian rupee touched a new record low of Rs 76.92 against the US dollar. Most pharma companies generate their revenues through exports. Hence, a depreciating rupee is a positive development for them.

As per Tanushree, in a post Covid-19 world, healthcare expenditures globally will see a big rejig.

Tanushree has her eyes on an exciting tech stock. The company in question is developing its medical division. It's focusing on telemedicine, which Tanushree believes will be a huge growth driver in a post Corona world.

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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