Sensex Opens Lower; Realty & Metal Stocks Drag

Thu, 25 Oct 09:30 am

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Asian stocks are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 2.8% while the Hang Seng is down 1.8%. The Shanghai Composite is trading down by 1.4%. US stocks plunged again on Wednesday, confirming a correction for the Nasdaq and erasing the Dow and the S&P 500's gains for the year, as disappointing forecasts from chipmakers and weak home sales data fueled jitters about economic and profit growth.

Back home, India share markets have opened the day on negative note. The BSE Sensex is trading down by 270 points while the NSE Nifty is trading down by 77 points. The BSE Mid Cap index opened the down by 0.9% while BSE Small Cap index opened the day down by 1%.

Take a look at the BSE SmallCap index chart...

The Smallcap Index Is Up Merely 1% from Its 2008 Top

On 7 January 2008, at the height of the previous bull run, the Smallcap index hit a high of 13,975. In the market crash that followed, the index hit a low of 2,867 on 9 March 2009. In other words, the Smallcap index tanked a whopping 79%!

From its 2009 low, the BSE SmallCap index has risen 391%, compounding at an annual rate of 18%.

But here's the most telling observation...

From its January 2008 peak to now, the BSE SmallCap index has gained just 0.8%.

If you factor in inflation, the returns are actually negative.

In other words, investors who bought smallcap stocks at market peaks and didn't go bargain hunting in the subsequent crashes didn't make any money.

As per our research analyst Ankit Shah, no investor gets rich investing when the markets are irrationally expensive.

As per him, one should be on the lookout for solid investing opportunities. Make staggered investments, so that if stock prices correct further, you can take advantage of lower prices.

Moving on, all sectoral indices have opened the day in red with realty stocks and metal stocks witnessing maximum selling pressure.

The rupee is trading at Rs 73.32 against the US$.

Information technology stocks opened the day on a mixed note with Asian Paints and Berger Paints leading the losers. Wipro on Wednesday reported a 13.8% YoY drop in profit at Rs 18.9 billion for September quarter.

The IT major had reported Rs 21.9 billion profit in the same quarter last year.

Net sales of the company rose 8.3% to Rs 145.4 billion compared with Rs 134.2 billion in the corresponding quarter of last year.

On a sequential basis, IT services revenues rose 4.9% to Rs 143.8 billion as against Rs 137 billionin the June quarter.

Wipro, meanwhile, also announced that it has appointed former State Bank of India chairman Arundhati Bhattacharya as an independent director beginning 1 January 2019.

The company's EBIT for the IT segment fell to Rs 21 billion in July-September from Rs 24 billion in April-June. EBIT margin at 14.6% for the second quarter was lower than 17.4% in the first quarter.

For the December quarter, Wipro expects revenue from IT services business to be in the range of US$2,028 million to US$2,068 million.

Wipro share price opened the day up by 2.6%.

To know more about the company, you can access to Wipro's latest result analysis and Wipro's 2017-18 Annual Report Analysis on our website.

Moving on to the news from the banking sector. IDFC Bank on Wednesday reported a net loss of Rs 3.7 billion for the September quarter due to higher provisioning even as the bank's bad loans came down.

The bank had posted a net profit of Rs 2.3 billion in the corresponding July-September period of 2017-18.

Total income was at Rs 24.5 billion for the quarter, up from Rs 23.7 billion in the same period of preceding fiscal.

There was an improvement in bank's asset quality during the September quarter of 2018-19 as the gross non-performing assets (NPAs) came down to 1.6% of the gross advances as against 3.9% a year ago.

The net NPAs, as a percentage of net loans, also reduced to 0.6% as on 30 September 2018 as against 1.6% earlier.

In absolute terms, the gross NPAs (or bad loans) stood at Rs 8.9 billion as against Rs 20 billion. Net NPAs were Rs 3.2 billion as compared to Rs 8 billion

In spite of NPA ratios falling down substantially, the bank kept a higher provisioning and contingencies of Rs 6 billion for the July-September period of the current fiscal.

However, there was a write-back of Rs 1 billion as provisions and contingencies in the same quarter of 2017-18.

Of the total provisions of nearly Rs 6 billion in second quarter, provision of Rs 3.4 billion is due to reclassification as per regulatory provisioning norms, Rs 2 billion is provision against investments including mark to market provisions in accordance with RBI guidelines, the bank stated.

IDFC Bank share price opened the day down by 1.7%.

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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