Sensex Ends 135 Points Lower; Metal & Automobile Stocks Witness Selling

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After opening the day on a positive note, share markets in India witnessed selling pressure throughout the day and ended marginally lower.

Barring FMCG sector, all sectoral indices ended on a negative note with metal stocks, automobile stocks, and oil & gas stocks witnessing maximum selling pressure.

At the closing bell, the BSE Sensex stood lower by 135 points and the NSE Nifty closed down by 60 points. The BSE Mid Cap index ended the day down 1.5%, while the BSE Small Cap index ended the day down by 1.2%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up 0.3% and the Shanghai Composite was up by 0.8%. The Nikkei 225 was up 0.4%.

Speaking of Indian share markets, Sarvajeet Bodas, editor of Smart Money Secrets presents an interesting analysis surrounding retail investors.

In today's chart of the day, he illustrates how retail investors are increasing their stake in stocks that have plunged over the past few months.

These stocks have fallen due to corporate governance issues, lack of management integrity, or debt worries.

Retail Investors Are Playing with Fire!

Here's a snippet of what he wrote:

• Just look at DHFL for example.
  
  The stock has dropped by whopping 78% this year. Despite this, more than 31,000 retail investors have bought the stock. This amounts to a 6.7% increase in their shareholding.
  
  Retail investors have been caught on the wrong foot once again as many of these stocks have fallen even more recently.
  
  Clearly, the aam investor would have been better off staying away from such a falling knife.

As per him, investors should focus on good quality companies. Companies who have strong financials and good growth prospects. And of course, reasonable valuations.

In news from the economy, the International Monetary Fund (IMF) has cut its projection for India's economic growth by 0.3 percentage point to 7% for 2019-20 due to subdued domestic demand.

Projection was also cut by 0.3 percentage point to 7.2% for the next financial year. However, reports stated that India will still be the fastest growing major economy of the world and much ahead of China.

IMF did not give details of muted domestic demand, but various sectors of the economy have been witnessing a slowdown. For instance, retail vehicle sales across the country fell by 5.4% in June year-on-year to 1.64 million units, according to data by the Federation of Automobile Dealers Associations (FADA).

Note that the earlier 7.3% projection was made by IMF in April when the second advance estimates had pegged India's economic growth rate to 7%. However, now the growth rate had come down to 6.8% which has been factored into by IMF.

In news from the paints sector, market participants were tracking Asian Paints share price. The company reported double digit growth across earnings parameters and in decorative business. Consolidated profit grew 17.7% to Rs 6,554.4 million in the quarter ended June 2019.

Shares of the company gained over 4% on back of the above news.

Revenues increased 16.6% to Rs 51,306.3 million compared to year-ago. The company had posted profit at Rs 5,568.5 million and revenues at Rs 43,985.9 million in the corresponding period of last fiscal.

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) increased 24.1% year-on-year to Rs 11,562 million and margins also expanded 130 basis points to 22.5%.

Reports state that the numbers were ahead of analyst estimates. Profit was expected at Rs 5,450 million on revenue of Rs 48,500 million and EBITDA was estimated at Rs 9,000 million with margin at 18.6% for the quarter.

Company's CEO and Managing Director KBS Anand said, "in the international operations, key units like Egypt and Sri Lanka continued to witness challenging business conditions impacting the overall performance. Both the segments in the home improvement category viz. the Kitchen (Sleek) and Bath business, performed well in June quarter."

He further added that the automotive coatings JV (PPG-AP) business was affected by the severe slowdown being witnessed in the automobile industry and even the industrial coatings JV (AP-PPG) business was impacted by demand slowdown.

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

Moving on to news from the commodity space, crude oil witnessed buying interest today amid rising tensions over Iran and positive signs on Sino-US talks, although worries about weak demand kept a cap on gains.

US crude stocks fell more than expected in the week to July 19, declining by 11 million barrels to 449 million, the trade group American Petroleum Institute said on Tuesday.

Speaking of crude oil, catch Vijay Bhambwani talk about trading in crude oil.

As per him, crude oil offers excellent opportunities in nearly all market conditions due to its unique standing within the world's economic and political systems.

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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