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Sensex Opens Strong; Consumer Durables and IT Stocks Gain
Mon, 14 Sep 09:30 am | Rini Mehta, TM Team

Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.6% while the Hang Seng is up 0.7%. The Nikkei 225 is trading up by 0.7%.

Among global indices, the Nasdaq slid and the S&P 500 closed little with change on September 11 as early gains in technology and growth names faded, with each of the three major Wall Street averages posting their second straight weekly decline.

Back home, Indian share markets have opened the day on a higher note.

The BSE Sensex is trading up by 322 points.

The NSE Nifty is trading higher by 82 points.

Meanwhile, the BSE Mid Cap index has opened up by 1%.

BSE Small Cap index is also trading higher by 1.6%.

Watch Now: 3 Little-known Stocks We are Super Bullish On

All sectoral indices are trading in green with BSE Consumer Durables Index witnessing buying interest.

Moving on, the rupee is currently trading at 73.48 against the US$.

Gold prices are currently trading down by 0.9% at Rs 51,319.

Gold prices are flat today as investors maintained a cautious approach ahead of US Federal Reserve's monetary policy decision this week and as optimism around a potential COVID-19 vaccine lifted appetite for riskier assets.

Spot gold was mostly unchanged at US$1,941.1 per ounce. US gold futures were also steady at US$1,948.3.

Speaking of the precious yellow metal, 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...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Even with the recent volatility in prices, gold and silver remain among the best performing commodities this year to combat the fallout from the coronavirus pandemic. Earlier, gold had hit a record high of Rs 56,191 in Indian markets amid a global rally.

So, is it time to book profits in gold and silver?

In this video below, India's no. 1 trader, Vijay Bhambwani tells what he thinks you should do with your bullion holdings.

Tune in here:

To know more about gold, just visit our Youtube Playlist on gold investing.

Moving on to the stock specific news...

Bhel is among the top buzzing stocks after it reported consolidated net loss widened to Rs 8.9 billion for the quarter ended June as coronavirus-induced lockdown had an adverse impact on its operations.

The total income of the company stood at Rs 20.9 billion in the June quarter this year. It had posted a total income of Rs 46.7 billion in the year-ago period.

It stated that the group's operations and financial results for the quarter have been very adversely impacted by the lockdown imposed to contain the spread of Covid-19.

The operations gradually resumed with requisite precautions during the quarter with limited availability of workforce and disrupted supply chain.

Bhel share price opened the day down by 2.2%.

In another development, the markets regulator clarified that multi-cap schemes need not necessarily churn their portfolios by selling largecap stocks or buying smallcaps in multicap schemes to meet the new norms.

It can also exercise options such as merging schemes with largecap funds, re-positioning them as large and midcap schemes or facilitating unitholders' switch to another scheme.

The market regulator said that fund houses can use these options among other things and also added that it will examine if any proposals are submitted by the industry to meet the desired objective of true-to-label and appropriate benchmarking.

Here's what Richa Agarwal, editor of our smallcap recommendation service Hidden Treasure, has to say about the above developments...

  • In 2017, the market regulator came up with categorisation and rationalisation norms for mutual funds that led to massive outflow of funds from smallcap space.

    Even fundamentally strong stocks in smallcaps were penalized because of regulation, that led to sharp correction in smallcaps and widening of valuation gap between large caps and smallcaps.

    At present, multicap funds' allocation to smallcaps is way below the suggested 25% limit. In most cases, it is well below single digits. So, these were hardly multicap funds, just mis-sold to investors with that impression. The decision on Friday for multicap funds is likely to bridge the gap between smallcaps and largecaps.

    That said, the long -term beneficiaries of this move will not be just any smallcap, but the ones with higher liquidity, strong balance sheets, sustainable business models and growth prospects and that are run by managements with strong reputations. I believe the move will lead to strong valuation gap within the smallcap space - with quality and liquid smallcaps surging higher.

    There are some concerns that this could lead to redemptions and launch of lesser multicap schemes in future, thus hurting smallcaps in the long term. I believe it's too early to come to such conclusions. There are smallcaps with huge potential to scale up and for rerating. And most largecaps don't deserve a valuation that they are trading at.

    That said, if one is buying smallcaps just hoping for a rally without doing a check on fundamentals and valuations, I think it would be detrimental for long term wealth. The decision on Friday for multicap funds, is likely to bring more transparency in the industry.

    Post Friday's announcement, the regulator has issued clarification that in order to comply, apart from rebalancing, AMCs can facilitate a switch in the scheme for the unit holders. They could even merge existing multicap schemes with other schemes, or convert them to large cap cum midcap scheme.

    Given this optionality, one should not consider investing in smallcaps in hope of a regulation driven rally. The only way to get rich in smallcaps is to be very selective about fundamentals, valuations and management quality. There are smallcaps with huge potential to scale up and for rerating. With right approach and allocation, there is a great scope of building lasting wealth in the smallcap space.

And here's what Tanushree Banerjee, editor of our safe stock recommendation service StockSelect, has to say about this development:

  • The 25-25-25 allocation directive for multicap funds does not seem to be an 'all weather' solution. Funds will find it rather difficult to stick to this allocation as and when smallcaps get too expensive or too risky. Meanwhile, this directive will lead to a correction in select bluechips and a rally in mid and smallcaps in the near term. However, this trend will be temporary. Eventually, smart money will move to stocks that offer returns with reasonable degree of safety.

How this pans out remains to be seen. We will keep you updated on all the news from this space. Stay tuned.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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Stock Market Updates

MRPL at 52 Week High; BSE 500 Index Up 2.0% (Today's Market)

Mar 1, 2021 03:34 PM

MRPL share price has hit a 52-week high. It is presently trading at Rs 45. BSE 500 Index is up by 1.7% at 19,713. Within the BSE 500, MRPL (up 8.3%) and RCF (up 20.0%) are among the top gainers, while top losers are HIMADRI SPECIALITY CHEMICAL and BHARTI AIRTEL.

KEC INTERNATIONAL Share Price Up by 5%; BSE CAPITAL GOODS Index Up 1.6% (Today's Market)

Mar 1, 2021 03:26 PM

KEC INTERNATIONAL share price is trading up by 5% and its current market price is Rs 454. The BSE CAPITAL GOODS is up by 1.6%. The top gainers in the BSE CAPITAL GOODS Index are KEC INTERNATIONAL (up 5.2%) and BHARAT ELECTRONICS (up 6.5%). The top losers are SCHAEFFLER INDIA (down 0.2%) and HINDUSTAN AERO. (down 0.3%).

GUJARAT ALKALIES Share Price Up by 10%; BSE 500 Index Up 1.6% (Today's Market)

Mar 1, 2021 03:24 PM

GUJARAT ALKALIES share price is trading up by 10% and its current market price is Rs 346. The BSE 500 is up by 1.6%. The top gainers in the BSE 500 Index are GUJARAT ALKALIES (up 10.2%) and DEEPAK NITRITE (up 14.5%). The top losers are COLGATE and HDFC AMC .

DEEPAK NITRITE Share Price Up by 13%; BSE 500 Index Up 1.4% (Today's Market)

Mar 1, 2021 03:10 PM

DEEPAK NITRITE share price is trading up by 13% and its current market price is Rs 1,553. The BSE 500 is up by 1.4%. The top gainers in the BSE 500 Index are DEEPAK NITRITE (up 12.8%) and JUST DIAL (up 14.2%). The top losers are BAJAJ HOLDINGS & INVESTMENT and CADILA HEALTHCARE .

HIMADRI SPECIALITY CHEMICAL Share Price Down by 11%; BSE 500 Index Up 1.4% (Today's Market)

Mar 1, 2021 03:08 PM

HIMADRI SPECIALITY CHEMICAL share price is trading down by 11% and its current market price is Rs 55. The BSE 500 is up by 1.4%. The top gainers in the BSE 500 Index are RCF (up 20.0%) and MMTC (up 20.0%). The top losers is HIMADRI SPECIALITY CHEMICAL (down 11.3%).

Sensex Trades Over 300 Points Higher; Dow Futures Up by 204 Points (Today's Market)

Mar 1, 2021 12:30 pm

BSE Sensex is trading up by 378 points, while the NSE Nifty is trading up by 165 points.

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