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Sensex Ends 219 Points Lower; Energy and Auto Stocks Witness Selling
Mon, 25 Jun Closing | Monish Vora, TM Team

After witnessing volatile trades during the day, Indian share markets ended their session on a negative note. Losses were largely seen in the oil & gas sector, auto sector and capital goods sector, while IT stocks ended the day higher.

At the closing bell, the BSE Sensex stood lower by 219 points (down 0.6%) and the NSE Nifty closed lower by 59 points (down 0.6%). The BSE Mid Cap index ended the day down by 0.8%, while the BSE Small Cap index ended the day down by 0.9%.

Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng was down 1.3% and the Nikkei stood lower by 0.8%.

The rupee was trading at 68.12 to the US$ at the time of writing.

In the news from the banking sector, Karnataka Bank share price was in focus today as the lender yesterday announced that it is planning to achieve a farm credit portfolio of Rs 90 bn for 2018-19.

As per the announcement, the bank will bestow a special focus to leverage these positives, and the management has advised the branches to focus on areas such as warehouse receipt finance, irrigation, farm mechanization, agricultural gold loan, crop loans, development loans and loans to agro-processing units for increasing the farm credit portfolio.

According to Mahabaleshwara MS, Managing Director and CEO of the bank, there are enough opportunities for financing in the agricultural sector following the government's vision to double farmer's income by 2022. As per him following modern agricultural practices will lead to an increase in productivity and the bank will be in the forefront in extending a helping hand to farmers for adopting new technologies.

Karnataka Bank share price closed the day down by around 1.6% on the BSE today.

Apart from Karnataka Bank, KRBL share price was also in focus today. Shares of the company plunged 20% in today's trade after it was reported that former director Gautam Khaitan had been arrested by the Enforcement Directorate in connection with AgustaWestland helicopter scam.

In other news, petrol price in Mumbai breached the Rs 85 per litre mark last week. This marks an all-time high for fuel prices in Mumbai. The situation is similar in Delhi and Chennai, where petrol was sold for Rs 77.5 and Rs 80.4 per litre, respectively last week.

The rise in prices come as oil companies have raised prices for the 11th successive day, as per a leading financial daily. So far, central and state governments have not shown willingness to bring down prices by cutting their tax component. There has been talk of the government levying a windfall tax on oil producers like ONGC as part of a permanent solution it is working on for moderating the spiraling retail prices of petrol and diesel.

Presently, the government levies heavy taxes which account for about half the cost of petrol and 40% of the diesel price. So, one of the possible ways for the government to reduce the rates is change the way in which pump prices are calculated.

The above rise in fuel prices is seen on the back of rising crude oil prices. In the past one year alone, oil prices have surged more than 50%.

Also note that rising crude oil prices not only affect fuel prices, but also has many other repercussions for the Indian economy.

They can be a big worry for the Modi government as well.

Have a look at the chart below. It shows India's total import bill of crude oil and petroleum products on an annual basis during the Manmohan Singh regime and the Narendra Modi regime.

Here's Why Crude Oil Was Modi's Best Friend So Far

It is clearly evident that the Modi government has been a big beneficiary of lower crude oil prices.

As Ankit Shah wrote in one of the editions of The 5 Minute WrapUp...

  • During the UPA II regime, India's average annual oil import bill was US$ 133 billion. In fact, in the last three years of Manmohan Singh's leadership, the oil import bill exceeded US$ 150 billion. Compare that with an average annual oil bill of US$ 95 billion during the four years of Modi's leadership.

    The actual savings would have been even higher, because I believe the consumption of crude oil and petroleum products would have been quite higher in the Modi era than the Manmohan era.

    Last Thursday, Brent crude oil prices shot above US$ 80 a barrel.

    This is the highest level since 2014. In the past one year alone, oil prices have surged more than 50%.

    Now, what if oil prices go back to the levels during the Manmohan Singh regime? What would happen to India's current account and fiscal deficit? What would happen to inflation and RBI's stance on interest rates?

    With the next general elections just a year away, rising crude oil prices are going to be a big worry for the Modi government.

    It should worry you too...

Apart from that, what does rising crude oil prices mean for stock markets?

Richa Agarwal, editor of Hidden Treasure, tracks the oil and gas sector very closely. She believes the rise in crude oil prices 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 wrote...

  • 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 the government handles this situation of rising crude oil and fuel prices remains to be seen. Meanwhile, we will keep you posted on all the developments from this space. Stay tuned.

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

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Stock Market Updates

DCM SHRIRAM Surges by 10%; BSE 500 Index Down 0.5% (Today's Market)

Sep 19, 2018 03:09 PM

DCM SHRIRAM share price has surged by 10% and its current market price is Rs 470. The BSE 500 is down by 0.5%. The top gainers in the BSE 500 Index is DCM SHRIRAM (up 10.3%). The top losers are BAJAJ HOLDINGS & INVSTMENT and RAJESH EXPORTS .

JET AIRWAYS Plunges by 5%; BSE 500 Index Down 0.7% (Today's Market)

Sep 19, 2018 02:45 PM

JET AIRWAYS share price has plunged by 5% and its current market price is Rs 253. The BSE 500 is down by 0.7%. The top gainers in the BSE 500 Index are UNION BANK (up 4.5%) and MONSANTO INDIA (up 3.7%). The top losers are JET AIRWAYS (down 5.3%) and PFIZER (down 6.8%).

UCO BANK Plunges by 7%; BSE BANKEX Index Down 0.4% (Today's Market)

Sep 19, 2018 02:39 PM

UCO BANK share price has plunged by 7% and its current market price is Rs 21. The BSE BANKEX is down by 0.4%. The top gainers in the BSE BANKEX Index are BANK OF BARODA (up 2.6%) and KOTAK MAH. BANK (up 0.7%). The top losers is UCO BANK (down 6.8%).

EDELWEISS FINANCIAL Plunges by 5%; BSE 500 Index Down 0.7% (Today's Market)

Sep 19, 2018 02:39 PM

EDELWEISS FINANCIAL share price has plunged by 5% and its current market price is Rs 261. The BSE 500 is down by 0.7%. The top gainers in the BSE 500 Index are UNION BANK (up 4.5%) and G.E.SHIPPING (up 4.1%). The top losers are EDELWEISS FINANCIAL (down 5.0%) and PFIZER (down 7.4%).

RELIANCE POWER Plunges by 6%; BSE POWER Index Down 0.3% (Today's Market)

Sep 19, 2018 02:37 PM

RELIANCE POWER share price has plunged by 6% and its current market price is Rs 34. The BSE POWER is down by 0.3%. The top gainers in the BSE POWER Index are BHEL (up 1.0%) and POWER GRID (up 0.3%). The top losers are RELIANCE POWER (down 6.0%) and RELIANCE INFRA (down 9.4%).

Sensex Opens Flat; Healthcare & Metal Stocks Gain (Today's Market)

Sep 19, 2018 09:30 am

Indian share markets open flat with Sensex trading up by 54 points, while the Nifty is trading up by 27 points.

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