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Sensex Ends Day in Red, Global Markets Cautious, and Top Stocks in Action
Tue, 13 Nov Pre-Open

On Monday, share markets in India opened on a positive note and ended the day in red after a volatile day of trading.

The BSE Sensex closed lower by 345 points to end the day at 34,812. While the broader NSE Nifty ended the lower by 103 points to end at 10,482.

Among BSE sectoral indices, auto stocks fell the most by 2.3%, followed by energy stocks at 1.9%. Tata Motors and Hero Motocorp were among the top losers.

Top Stocks in Action Today

HPCL, BPCL share price is likely to be in focus as oil prices trade on a volatile note.

Crude oil prices jumped as top exporter Saudi Arabia announced a supply cut in December and other producers also considered supply reductions in 2019.

Tata Motors share price is among the stocks to watch today as the company reported weak Jaguar Land Rover (JLR) sales for the month of October.

As per the data, JLR's total retail sales fell 4.6% in October. Its sales fell 46% in China and 13.5% in Europe for the concerned month.

Oil Prices in Focus

Crude oil prices jumped as top exporter Saudi Arabia announced a supply cut in December and other producers also considered 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%.

The above situation along with the falling rupee doesn't bode well for the Indian economy.

This is because rising crude oil prices not only affect fuel prices, but also has many other repercussions on the macroeconomic level for the Indian economy.

They can be a big worry for the Modi government as well as it has been a big beneficiary of lower crude oil prices.

Also, 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

Speaking of crude oil, almost every time a rise or fall in the stock markets is invariably linked to crude oil prices.

Logically, it seems right too. Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening. After all, there is an election year coming up.

But has it really affected the stock markets?

Here's what Girish Shetty wrote about it on one of the recent editions of The 5 Minute WrapUp...

  • In the short-term: Yes.

    But in the long run, as we can see, Sensex returns have been independent of crude oil prices or even positively co-related!

    Crude oil prices doubled from US$ 41 in December 2008 to US$84 in April 2010. In the same time, Sensex also doubled from 8,800 levels to 17,600 levels.

    So, please don't fret unnecessarily about crude oil.

    Check if your business has a moat that helps it pass on input price increases to its customers. In the long run, they will survive and also gain market share from those that can't pass on prices. Short term pessimism due to rising crude oil prices provides a buying opportunity in these stocks.

As per him, focusing on quality stocks rather than crude oil will matter more in the long run.

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