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Sensex Ends Day on a Tepid Note; Energy Stocks Top Gainers
Wed, 18 Oct Closing

After opening the day in red, share markets in India witnessed volatile trading activity throughout the day and ended the day on a weak note. Losses were seen across most sectors with stocks in the banking sector and stocks in the healthcare sector, leading the losses.

At the closing bell, the BSE Sensex stood lower by 25 points (down 0.1%) and the NSE Nifty closed lower by 24 points (down 0.2%). The BSE Mid Cap index ended the day flat, while the BSE Small Cap index ended the day lower by 0.1%.

Asian stock markets finished higher in green. As of the most recent closing prices, the Hang Seng was flat and the Shanghai Composite was up by 0.3%. The Nikkei 225 was up by 0.1%. European markets too were trading in green. The FTSE was 100 up by 0.3%. The DAX was higher by 0.5% while the CAC 40 was up by 0.5%.

The rupee was trading at Rs 65.11 against the US$ in the afternoon session. Oil prices were trading at US$ 52.35 at the time of writing.

Steel stocks finished the day on a mixed note, with Tata Steel leading the losses. However, SAIL share price ended the day on a positive note.

In a bid to guard the interest of domestic players from cheap in-bound shipments, the government has imposed anti-dumping duty on imports of some flat steel products from China and European Union (EU) for five years. The duty will be the difference between the landed value of the steel products and US$822 per tonne.

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The duty was imposed after the commerce ministry's directorate general of anti-dumping and allied duties (DGAD) recommended duty on such imports. In its findings, the DGAD had concluded that 'colour coated/pre-painted flat products of alloy or non-alloy steel' has been exported to India from these regions at below the normal value, due to which domestic industry has suffered material injury.

This anti-dumping duty will be valid for a period of five years (unless revoked, superseded or amended earlier) from11th January and shall be payable in Indian currency. While DGAD recommends the duty to be levied, the finance ministry imposes it.

Due to such similar anti-dumping duties, India became a net exporter of steel in 2016-17 as imports fell gradually.

No Takers for Domestic Steel

The government has already slapped anti-dumping duty on certain cold-rolled flat steel products from four nations, including China and South Korea. Countries initiate anti-dumping probes to determine if the domestic industry has been hurt by a surge in below-cost imports. As a counter-measure, they impose the duty.

These duties are in compliance with the rules of global trade body World Trade Organisation (WTO). The duties also ensure fair trade by providing a level- playing field to the domestic industry. They are not a measure to restrict imports or cause an unjustified increase in the cost of products.

Moving on to news from stocks in the oil and gas sector. ONGC share price ended the day on an encouraging note.

The buying interest came as the start run company said will soon invite bids from oilfield service providers to enhance output from some of its ageing fields.

According to The Economic Times, ONGC's Executive Committee of is expected to give the proposed policy a final shape this month, following which the company would float a tender inviting bids in another two months or so.

The bids will be for long-term contracts whereby winners will get a predetermined fee for adding incremental production.

In December last year, ONGC had signed similar enhancement agreements with Schlumberger and Halliburton for enhancement of production from its matured fields of Geleki in Assam and Kalol in Gujarat, respectively. But the pacts were dumped after suggestions that they were legally vulnerable. This forced ONGC to formulate a competitive bidding model.

Under this proposed model, the service provider will get fee for every incremental unit of oil or gas produced as well as for maintaining the 'baseline' production at the field. Those seeking the lowest fee will win the bid.

Under the previous agreement which was scrapped, ONGC and the service providers had to jointly agree on a 'baseline' output. Which was not preferred by the bidders.

A successful auction could mean billions of dollars of investments into ONGC's fields over the next few years besides an increase in output.

ONGC share price ended the day up by 1.8%.

And here's a note from Profit Hunter:

The Nifty 50 Index traded on a positive note during the week. On Monday, it opened the session 40 points gap up and continued to trade higher to close the session well. The steady momentum continued as the index hit a new lifetime high during the week. The index witnessed some profit booking on the final day of the week, but ended its weekly session 0.43% up.

We mentioned last week that the index broke above the 9,700 - 10,150 range, which indicates that the bulls party might continue for some more time. But now we have observed one interesting thing on the charts.

Nifty - Bank Nifty Diverges
Nifty - Bank Nifty Diverges 

The above is the chart of Nifty index and the Bank Nifty index. As you can see, the Nifty made a new high during the week, but Bank Nifty failed to do so. We call this a price divergence. Usually, markets are said to be healthy when both nifty and bank nifty confirm each other. But currently, Bank Nifty does not confirm the Nifty's price action.

Does this indicate a sign of a market top? Or, is it just a matter of time before Bank Nifty will confirm Nifty's movement? It is an interesting setup, let's keep a close watch on it.

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