Sensex Opens Lower; Banking Stocks Under Pressure

Thu, 25 Jun 09:30 am

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Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.3%, while the Nikkei 225 led the Hang Seng lower. They fell 1.3% and 0.5% respectively.

Wall Street's three major indices on Wednesday suffered their biggest daily percentage drop in almost two weeks as a surge in US coronavirus cases intensified fears of another round of government lockdowns and worsening economic damage.

Back home, Indian share markets opened on a negative note.

The BSE Sensex is trading down by 247 points. The NSE Nifty is trading down by 71 points.

Meanwhile, the BSE Mid Cap index has opened down by 0.4%.

BSE Small Cap index is trading lower by 0.8%.

All sectoral indices are trading in the red with BSE Bankex witnessing maximum selling pressure.

Moving on, the rupee is currently trading at 75.64 against the US$.

Gold prices are currently trading down by 0.2% at Rs 48,134.

Yesterday, gold prices in India hit a new high amid a strong global rally in the precious metal.

On MCX, August gold futures rose about 0.4% to a new high of Rs 48,420 per 10 grams, surpassing previous high of Rs 48,289.

Silver rates dropped with futures on MCX edging lower by 0.1% to Rs 48,716 per kg.

In global markets, gold prices jumped to its highest level in about eight years. Surging coronavirus cases across the world and hopes of more stimulus measures lifted the demand for gold.

In global markets, spot gold was up 0.2% at US$1,769.6 per ounce. Earlier in the session, it hit US$1,773, its highest level since late 2012. US gold futures rose 0.4% to US$1,789.2.

Note that gold prices have also been lifted by the fear of inflation that will come from the cash governments and central banks are approving around the world as they continue to provide much-needed support to pandemic-hit economies.

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.

In one of his videos, Vijay Bhambwani, editor of Fast Profits Daily explains why this year's US presidential elections could be bullish for gold.

As per him, the US presidential cycle may not be as predictable this time as it usually is. But there is good money to be made if you can play this trend correctly.

He shows a simple way to profit from this important event.

Tune in here to know more: This Year's US Presidential Cycle Could Be Bullish for Gold and Silver.

Moving on to the stock specific news...

State Bank of India (SBI) is among the top buzzing stocks today.

As per an article in a leading financial daily, SBI has increased its foreign offices to 233 as on March 2020 from 208 a year ago. It opened 32 new offices and closed seven.

The lender now has 58 overseas branches and sub-offices, 163 offices of subsidiaries, seven representative offices, five joint ventures/associates.

The offices operate under nine subsidiaries, a majority of which are owned by the bank. The nine subsidiaries include State Bank of India California, SBI Canada, SBI UK, Commercial Indo Bank LLC, SBI Mauritius, Bank SBI Indonesia, Bank SBI Botswana, Nepal SBI Bank.

SBI also has a foreign non-banking subsidiary, SBI Servicos Limitada, Brazil, and a joint venture, Bank of Bhutan.

SBI's overseas operations include trade finance and funding the capital needs of India-based companies.

This includes helping Indian corporates in their growth strategy, including green-field ventures, by arranging debt in foreign currency by way of external commercial borrowings through syndicated deals in conjunction with other Indian and foreign banks, and through bilateral arrangements.

In FY20, SBI closed four branches--Nassau (Bahamas), Paris (France), Jeddah (Saudi Arabia) and Tianjin (China).

It merged two branches, Gulshan with Dhaka, Bangladesh, and Verdun Road with Little India in Singapore.

SBI share price opened the day down by 1.4%.

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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