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SGX Nifty Trades Lower, US-China Tensions, JK Lakshmi Cement Q4 Results, and Top Cues in Focus Today
Fri, 22 May Pre-Open | Monish Vora, TM Team

Indian share markets ended marginally higher yesterday.

Benchmark indices erased most of gains in the last hour of trading, but still ended on a positive note for the third straight day.

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

At the closing bell yesterday, the BSE Sensex stood higher by 114 points and the NSE Nifty closed up by 40 points.

The BSE Mid Cap index and the BSE Small Cap index ended up by 0.8% and 0.7%, respectively.

SGX Nifty is currently trading down by 51 points, or 0.56% lower at 9,030 levels. Indian share markets are headed for a flat to negative start today following the negative trend on SGX Nifty.

Asian stock markets witnessed selling pressure yesterday as deteriorating Sino-American ties cast a cloud over the recent rally in risk assets.

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President Donald Trump stoked tensions by tweeting criticism of Xi Jinping's leadership, two days before the biggest Chinese political gathering of the year.

Speaking of stock markets and the coronavirus crisis, 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...

Richa also recently spoke about her top 3 stocks at the Pathbreaking Profits Summit.

Thousands attended the summit. In case you missed it, you can still watch the video of the summit here or if you prefer, you can read the transcript here.

Moving on, market participants will be tracking Bajaj Finserv share priceHawkins Cookers share price, and Colgate Palmolive share price as these companies announced their March quarter results (Q4FY20) yesterday.

You can read our recently released Q4FY20 results of other companies here: Ultratech CementBajaj AutoL&T InfotechNescoApollo Tyres, Ajanta Pharma, Jubilant Foodworks.

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Domestic Gold Prices Ease

Domestic gold prices edged lower yesterday for the first time in three days. On (Multi Commodity Exchange MCX), June gold futures fell 0.6% to Rs 46,845 per 10 grams.

Tracking gold, silver futures slumped 1.6% to Rs 48,255 per kg.

Last week, gold prices had hit a new high of Rs 47,980 tracking rally in global rates amid increasing US-China tensions and expectations of further stimulus from central banks.

In global markets, gold prices eased yesterday but losses were capped amid US-China tensions. Spot gold slid 0.6% to US$ 1,738.97 per ounce. US gold futures slipped 0.6% to US$ 1,740.80.

The US Senate passed a bill that could bar some Chinese companies from listing on American exchanges.

Earlier this week, on Monday, gold rallied to its highest since October 2012, driven by economic damage concerns, US-China tensions, and massive monetary and fiscal stimulus.

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 we 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."

Also speaking of gold, note that the interest in gold has gone up ever since stock markets crashed in March. Gold prices in the international markets are getting close to its all-time high.

But bitcoin has been on an up move too. It's price in dollars has almost doubled in the last two months.

In his latest video, Apurva Sheth, lead chartist at Equitymaster, compares gold and bitcoin. He explains, which is the better asset in this difficult economic situation.

Tune in to his video here...

JK Lakshmi Cement March Quarter Results

JK Lakshmi Cement reported a more-than-double profit before tax (PBT) at Rs 1.3 billion for March quarter, on the back of strong operational performance.

The company had a PBT of Rs 574 million in the same quarter last fiscal.

The company's sales at Rs 10.6 billion were lower as compared to Rs 11.7 billion in the corresponding quarter of previous year because of the lockdown in the last 10 days of the month.

The company's EBITDA (earnings before interest, tax, depreciation and amortisation) during the quarter rose 51.6% to Rs 2,245 million against Rs 1,481 million in the year-ago quarter.

EBITDA margin improved to 21.1% from 12.6% in Q4FY19.

The management said the company's efforts in improving product mix, market optimisation, enhancing the premium products sales, reduction in logistic costs and improvement in plant efficiency parameters enabled the company to post better returns.

To know more, you can read the company's latest result analysis on our website.

M&M in Talks to Sell 29% Stake in Specialty Steel JV

From the automobiles sector, Mahindra & Mahindra is in talks to sell 29% stake in its speciality steel joint venture (JV) back to its two existing partners, Japan's Sanyo Special Steel Co and Mitsui Corp.

Reportedly, the company is looking to exit from non-core businesses. M&M will sell its stake in Mahindra Sanyo Special Steel (MSSSPL) in one shot or in multiple tranches and is aiming to raise Rs 2.5-3 billion.

M&M had 51% in the JV and Sanyo 29%, while the remaining 20% was held by Mitsui.

However, in 2018, Sanyo bought around 22% in Mahindra Sanyo, increasing its holding to 51%.

Consequently, MSSSPL ceased to be a subsidiary of M&M. Note that, MSSSPL had revenues of around Rs 1.2 billion in FY19.

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

Exit Option for Franklin Templeton Mutual Fund Investors

Moving on to news from the mutual funds space, the Indian stock market regulator mandated listing of units of schemes being wound up, giving investors of schemes in Franklin Templeton Mutual Fund an alternative route to access liquidity if they don't wish to wait for receipts from portfolio investments.

In a circular, the regulator said that "pursuant to listing, trading on the stock exchange mechanism will not be mandatory for investors. Rather, if they so desire, they may avail of an optional channel of exit provided to them."

Reports state that the above move could help in creating a market, where investors get some access to liquidity even in stressed debt portfolios.

Last month on April 23, Franklin Templeton Mutual Fund announced the winding up of six of its yield-oriented debt schemes, in light of heightened redemption pressure and lack of liquidity in debt markets, following the Covid-19 outbreak.

According to estimates, around 3,00,000 investors are impacted by Franklin Templeton's move to wrap up six of its yield-oriented debt schemes.

This week, the fund house appointed the debt capital markets team of Kotak Mahindra Bank as an independent advisor to expedite the process of monetizing assets in the portfolios, while trying to preserve the value of investments.

Speaking of the Franklin Templeton fiasco and mutual funds, Ajit Dayal, founder of Quantum group, talks about the corruption in the Indian mutual fund industry, in one of his latest articles. You can read the same here: Black swans, Black crows and Fund lies

Vijay Bhambwani has also recorded a video on the analysis of the situation and his recommendation for debt fund investors. You can check the same here: What the Franklin Templeton Fiasco Means for Traders

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!

Read the latest Market Commentary


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Stock Market Updates

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Jul 13, 2020 03:32 PM

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RAIN INDUSTRIES Share Price Up by 13%; BSE 500 Index Up 0.2% (Today's Market)

Jul 13, 2020 03:24 PM

RAIN INDUSTRIES share price is trading up by 13% and its current market price is Rs 102. The BSE 500 is up by 0.2%. The top gainers in the BSE 500 Index are RAIN INDUSTRIES (up 13.0%) and BASF INDIA (up 10.1%). The top losers are MINDTREE and SUNDRAM FASTENERS .

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Jul 13, 2020 02:56 PM

BASF INDIA share price is trading up by 10% and its current market price is Rs 1,318. The BSE 500 is up by 0.3%. The top gainers in the BSE 500 Index is BASF INDIA (up 10.2%). The top losers are VARDHMAN TEXTILES and NATCO PHARMA (down 0.1%).

TECH MAHINDRA Share Price Up by 5%; BSE IT Index Up 1.4% (Today's Market)

Jul 13, 2020 02:32 PM

TECH MAHINDRA share price is trading up by 5% and its current market price is Rs 598. The BSE IT is up by 1.4%. The top gainers in the BSE IT Index is TECH MAHINDRA (up 5.0%). The top losers are TCS (down 0.1%) and PERSISTENT SYSTEMS (down 1.1%).

Sensex Trades in Green; Tech Mahindra & Reliance Industries Top Gainers (Today's Market)

Jul 13, 2020 12:30 pm

The BSE Sensex is trading up by 211 points, while the NSE Nifty is trading up by 68 points.

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