Sensex Opens Flat; Capital Goods & Banking Stocks Lag

Tue, 13 Nov 09:30 am

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Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.5% while the Hang Seng is down 1.2%. The Nikkei 225 is trading down by 3.3%. Meanwhile, Wall Street's major indices fell on Monday, with the S&P 500 sliding 2%, weighed by technology and financial stocks as shares of Apple Inc and Goldman Sachs Group Inc came under pressure.

Back home, India share markets have opened the day on a flat note with negative bias. The BSE Sensex is trading down by 46 points while the NSE Nifty is trading down by 13 points. The BSE Mid Cap index and BSE Small Cap index opened the day down by 0.3% & 0.2% respectively.

Sectoral indices have opened the day on a mixed note with PSU stocks and energy stocks witnessing maximum buying interest. While, bank stocks and capital goods stocks have opened the day in red.

The rupee is trading at Rs 72.61 against the US$.

Speaking of stocks, if you wondering whether the boring stocks will do well against smallcaps as well as asset classes like gold and fixed income over the long term, take a look at this chart.

Boring Bluechips are Necessary for Risk Hedged Returns

The BSE 500 which represents a mix of bluechip and midcap stocks, underperformed the BSE smallcap index only over the 5-year period. And even in a year of sharp market correction (like 2018), the correction in the index is much lesser than that of the smallcap index.

In the news from the economy. India's retail inflation rate dropped sharply in October but plunging farm prices sent a stark warning to Prime Minister Narendra Modi about the challenges he faces in rural areas in next year's general election.

The rate, which includes food and energy prices, dropped in October to 3.31% on a year-on-year basis, the slowest pace in 13 months and remains below the Reserve Bank of India's (RBI) medium-term target of 4% for a third straight month. The September inflation rate was a revised 3.7%.

Inflation risks have ebbed after a fall in global crude oil prices by about 20% since early October to around US$71 a barrel. The rupee has also stabilised after a slide of more than 14% in the first 10 months of this year, which has made it the worst performing Asian currency in 2018.

The RBI's monetary policy committee unexpectedly left the repo rate at 6.5% last month when markets had expected a hike.

Slower inflation in food prices, which make up nearly half of India's consumer price index (CPI), are helped by bumper crop supplies and sale of subsidised food grain to nearly two-thirds of India's population of 1.3 billion. That has, in turn, helped keep overall inflation in check.

Retail food prices fell 0.9% in October from a year earlier, against a 0.5% rise in September, as farm prices dropped despite the government's announcement of sharp increase in food grain procurement prices ahead of state elections in the next few weeks.

However, at Equitymaster, we do not attempt to predict how and when macroeconomic developments will unfold. Instead, we focus on the fundamentals and the underlying business strength of companies.

The ValuePro team is always on the lookout for all-weather stocks whose fortunes are not tied to economic cycles.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Lupin has launched the Atovaquone Oral Suspension USP, 750 mg/5 mL having received an approval from the United States Food and Drug Administration (FDA) earlier.

Lupin's Atovaquone Oral Suspension is the generic equivalent of Glaxosmithkline LLC's Mepron oral suspension 750 mg/5 ml.

It is indicated for the prevention of Pneumocystis jirovecii pneuomonia (PCP) in adults and adolescents aged 13 years.

As per IQVIA MAT September 2018 data, Atovaquone oral suspension had annual sales of around US$ 119 million in the US.

To know more about the company, you can access to Lupin's Q1FY19 result analysis and Lupin's 2017-18 Annual Report Analysis on our website.

Lupin share price opened the day up by 0.1%.

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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