Sensex Ends 331 Points Higher; Oil & Gas Stocks Witness Buying

Tue, 13 Nov Closing

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After opening on a negative note, share markets in India witnessed buying interest during closing hours and ended the day on a positive note. Sectoral indices were trading on a positive note with stocks in the oil & gas sector and capital goods sector leading the gains.

At the closing bell, the BSE Sensex stood higher by 331 points (up 1%) and the NSE Nifty closed up by 100 points (up 0.9%). The BSE Mid Cap index ended the day up 0.3%, while the BSE Small Cap index ended the day up by 0.2%.

The rupee was trading at Rs 72.65 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.6% and the Shanghai Composite was up by 0.9%. The Nikkei 225 was down by 2.1%. European markets were trading on a positive note. The FTSE 100 was up by 0.2%. The DAX was up by 0.5%, and the CAC 40 was up by 0.2%.

Bank of India share price, Tata Steel share price, Sun Pharma share price, Apollo Tyres share price, Dilip Buildcon share price, Glenmark Pharma share price, and NMDC share price were among the stocks in focus today as these companies announced their quarterly results today.

Speaking of quarterly result announcements, there is typically a big contrast between quarterly and annual earnings performance of companies and the extent to which they find favour among investors.

Over the last two months, for instance, stocks of companies that showed earnings recovery in September quarter, were as beaten down from 52-week highs as the stocks that underperformed in earnings.

Follow the Quarterly Result Investing Herd at Your Own Risk

Beware of following such herds.

Instead, stick to the best safe stocks in the market.

From the pharma space, Cipla share price was also in focus today as the company announced that its subsidiary InvaGen Pharmaceuticals Inc has entered into definitive agreements to acquire US-based speciality business firm Avenue Therapeutics for up to US$ 215 million.

Cipal said it intends to acquire Avenue Therapeutics, Inc, a Fortress Biotech company, in two stages.

Avenue Therapeutics is focused on development and commercialisation of intravenous (IV) Tramadol, a painkiller.

Moving on to the news from the macroeconomic space, India's industrial production grew 4.5% in September compared with the upward revised 4.7% in August.

This is seen as the slowest pace in four months which was seen on the back of poor performance of the mining sector and lower offtake of capital goods.

As per the data, the mining sector output growth decelerated to 0.2% in September as against 7.6% in the year-ago month. Similarly, capital goods output growth slowed to 5.8% in the month from 8.7% a year ago.

As per the use-based classification, the growth rates in September 2018 over September 2017 are 2.6% in primary goods, 1.4% in intermediate goods and 9.5% in infrastructure goods. The consumer durables and consumer non-durables recorded growth of 5.2% and 6.1%, respectively.

The IIP was recorded at 6.9% and 6.5% in June and July this year, respectively. The previous low was recorded at 3.8% in May this year.

For the first six months of the year, factory output as measured by the index of industrial production (IIP) grew 5.1% compared with 2.6% in the year-earlier period.

In the news from commodity markets, crude oil was witnessing selling pressure today. Prices fell by more than 1% after US President Donald Trump put pressure on the Organization of Petroleum Exporting Countries (OPEC) not to cut supply to prop up the market.

The above development comes as top exporter Saudi Arabia yesterday announced a supply cut in December and other producers are also considering supply reductions in 2019.

As per the news, Saudi Arabia is planning to reduce oil supply to world markets by 500,000 barrels per day (bpd) in December. This is because the country is facing uncertain prospects in getting other producers to agree to a coordinated output cut.

Khalid al-Falih, the country's energy minister, told reporters that Saudi Aramco's customer nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5%.

Speaking of crude oil, note that India's crude oil production was lower by 4.2% in September 2018 as compared to last year.

The worrying factor is this was the lowest production this year.

Here's what Tanushree Banerjee wrote about it in a recent edition of The 5 Minute WrapUp...

• Comparing domestic production with the crude oil processed by refineries gives an idea of the demand supply gap. Low domestic production as compared to the demand for crude oil places a huge burden on India's import bill.
  
  Rising crude oil prices could have severe implications. Rising inflation. Rising interest rates. Pressure on the government to cut excise duty, thereby impacting its revenues.
  
  We have seen some of this play out. With elections around the corner, expect a lot of subsidies on fuel prices. This is bound to worsen India's fiscal deficit further.

It would be interesting to see how the above supply reductions come into effect. Meanwhile, we will keep you updated on all the developments from this space.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.

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