Indian Indices Continue Momentum, Crude Oil Prices, and Top Stocks in Action Today

Wed, 12 Jun Pre-Open | Monish Vora, TM Team

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On Tuesday, share markets in India traded on a positive note most of the day and ended higher.

The BSE Sensex closed higher by 166 points to end the day at 39,950. Tata Motors and ONGC were among the top gainers.

While the broader NSE Nifty ended up by 43 points to end at 11,966.

Among BSE sectoral indices, metal stocks gained the most by 1.3%, followed by banking stocks and energy stocks.

Top Stocks in Action Today

Eicher Motors share price and Volvo Group's joint venture (JV) - VE Commercial Vehicles has called for fiscal measures to boost growth in the auto sector. The company is also planning to invest Rs 7 billion this fiscal, a part of which will go into adding capacity.

Bharat Dynamics share price has signed a contract worth Rs 11.9 billion for supply of heavy weight torpedoes.

Bharat Heavy Electricals (BHEL) share price has also secured a prestigious order for the work of the upcoming Turbine Generator (TG) island Units 3&4 at Kudankulam Nuclear Power Project in Tamil Nadu.

Wipro share price has rolled out total operations system (TOPS) crew, a fully-integrated IT product suite for global airlines. Developed jointly by the company and Qatar Airways in an innovative co-investment model, TOPS is one of the most advanced products available in the aviation market.

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IPO Buzz

The 150-years-old privately held conglomerate, Shapoorji Pallonji Group, is planning to make its first initial public offering with a Rs 45 billion issue of arm Sterling & Wilson Solar.

The group is exploring various ways to unlock value and deleverage balance sheet, as it faces rising cost pressures and sluggish sales volumes. The IPO of Sterling & Wilson Solar, the group's solar power engineering, procurement and construction (EPC) business, could be the first on this front.

Proceeds from the issue will be used by the promoters to capitalise the parent company, which can in turn repay the loans it has taken from Sterling & Wilson Solar, making it a zero-debt company.

Sterling & Wilson Solar's total order book stood at Rs 65.1 billion as of December 31, 2018.

From the Commodities Space...

Oil prices steadied above US$ 62 per barrel on Tuesday on expectations that OPEC and its allies will keep withholding supply. On Monday, Russia said it might support an extension of OPEC-led supply cuts that have been in place since January.

The price of Brent is down almost 20% from its 2019 peak above US$ 75 a barrel in April, pressured by an economic downturn that has started to impact oil demand.

Reportedly, OPEC+ is due to meet in late June or early July to decide whether to extend the pact. Russia's comments on Monday, and remarks last week from Saudi Arabia, bolstered expectations the deal will be renewed.

Note that within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018.

That has made the United States the world's biggest producer ahead of Russia and Saudi Arabia.

As you know, rising crude oil prices have a big impact on the Indian economy as it imports over 70% of its energy needs.

Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening.

Research Analyst, Richa Agarwal believes that this has the potential to bring down sentiments in the domestic markets. She further believes that, if oil prices continue their upward march in a tight global environment, a broader correction in the sentiment fueled domestic market cannot be ruled out.

From the Macroeconomic Space...

Former chief economic advisor Arvind Subramanian believes India's average annual growth between 2011-12 and 2016-17 may have been overestimated by about 2.5 percentage points.

In a new research paper, made public on Tuesday moring, Subramanian has pointed out that that instead of the reported growth of 6.9% between 2011 and 2016, actual growth was more likely to have been between 3.5% and 5.5%.

The paper traces "part of the overestimation" to a key methodological change in the way India calculated GDP.

In an article in The Indian Express early morning today, Subramanian mulls over the consequences of reduced growth during this period.

So, what does this mean for India? Has the Indian economy slowed down much more than expected?

We don't know. But we do know that over the next few weeks a lot of ink and clicks are going to be devoted to understanding the past.

While there's some merit to that effort...we believe a more beneficial exercise may be to understand what lies ahead.

You see, we believe that India is destined to prosper.

In fact, as per co-head of research, Tanushree Banerjee, there are certain irreversible trends which will set the stage for massive growth in India over the next decade...leading to what she calls the Rebirth of India.

In all, she has discovered 50 irreversible trends that are changing our country for the better. These changes will be permanent, and they will have huge consequences for wealth creation in the stock market.

Tanushree has already identified 7 stocks that are likely to benefit from this trend. She believes these stocks are in the right place at the right time. They're the best stocks to buy on the journey to Sensex 100,000.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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