Sensex Ends 72 Points Lower; Capital Goods and Auto Stocks Witness Selling

Mon, 18 Nov Closing | Monish Vora, TM Team

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India share markets witnessed selling pressure during closing hours and ended their day marginally lower.

At the closing bell, the BSE Sensex stood lower by 72 points (down 0.2%) and the NSE Nifty stood flat.

The BSE Mid Cap index ended the day down 0.4%, while the BSE Small Cap index ended the day down 0.3%.

Sectoral indices ended on a mixed note. Stocks in the auto sector and capital goods sector witnessed selling pressure, while telecom stocks and metal stocks were trading in the green.

The rupee was trading at 71.79 against the US$.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 1.35% and the Shanghai Composite was up by 0.62%. The Nikkei 225 was up 0.49%.

European markets were trading on a mixed note. The FTSE 100 was up by 0.04%. The DAX was trading down by 0.09%, while the CAC 40 was down by 0.23%.

In the news from the commodity space, gold was witnessing selling pressure today as optimism grew about US-China trade ties following a report of constructive talks over the weekend.

Losses for the yellow metal, however, were capped by a weakening dollar.

As per the news, Washington and Beijing had a high-level phone call on Saturday and that the two sides discussed each other's core issues for the first phase of an initial trade agreement.

Gold is considered a safe store of value during times of economic or political uncertainty. Market participants will be tracking what effect these trade war talks have on gold prices in the coming days.

They are also awaiting minutes of the Federal Reserve's last policy meeting, due on Wednesday, for clues about the future interest rate trajectory which can influence gold prices.

Speaking of gold, how lucrative gold has been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in today's edition of The 5 Minute WrapUp...

• In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment.
  
  If you grab a pie of the big money-making opportunities beyond stocks, I would strongly insist you attend Vijay's Weekly Cash Summit here (It's free).

In the news from the macroeconomic space, as per a leading financial daily, the government has given 'in-principle' approval for the sale of strategic stakes in 28 state-run companies including state carrier Air India.

The government has so far raised Rs 173.6 billion (US$ 2.43 billion) in the 2019-20 fiscal year ending in March, against the full-year's target of Rs 1.05 lakh crore, junior finance minister Anurag Singh Thakur said in a reply in Lok Sabha.

Also, in a different news, finance minister Nirmala Sitharaman said that the government is planning to sell state-run airline Air India and the oil marketing PSU Bharat Petroleum Corporation (BPCL) by March 2020. The finance minister stated that the strategic disinvestment of the two state-run companies is critical for the government to meet its disinvestment target of Rs 1 lakh crore for the current fiscal year.

The finance minister added that there is a lot of interest among investors which is apparent in international roadshows ahead of Air India's sale.

The government had to drop the national carrier's stake sale last year owing to investors' lukewarm response. But, it is counting on proceeds from disinvestment - which includes the strategic sale and public offers - to bolster its revenues in a year when tax collections suggest a likely fiscal slippage.

The finance minister told that the government, however, has been taking a lot of steps to arrest the downturn in the economy which is manifested in a lot of sectors coming out of distress. She further stated that the industry captains had contributed to improving their balance sheets and many of them were also mulling fresh investments.

The finance minister said that she expected GST collections to revive following an improvement in sales in some segments as well as owing to the government's measures to plug leakages lately.

How the above developments pan out remains to be seen. Meanwhile, we will keep you updated on all the news from this space.

Moving on to other news, HCL Infosystems share price was in focus today after the company sold stake in its wholly owned subsidiary.

HCL Learning, a wholly owned subsidiary of HCL Infosystems, has concluded the sale of entire shareholding of its wholly owned subsidiary HCL Insys Pte Ltd, Singapore, to PCCW Solutions, Hong Kong.

The investment of HCL Insys Pte Ltd in its subsidiary Nurture Technologies FZE (formerly known as HCL Infosystems MEA FZE) was excluded from the transaction along with the trading business carried out by HCL Insys Pte Ltd which was carved out before transfer of the entity.

Both were transferred to HCL Investments Pte Ltd, a wholly owned step down subsidiary of HCL Infotech.

Wockhardt share price was also in focus today after it was reported that domestic strategic suitors and global private equity firms are in the race to buy select business divisions of the company. These divisions have been put on the block to reduce the firm's debt burden.

As per the news, Cipla, Dr Reddy's Laboratories, private equity fund Carlyle and Hong Kong-based investment fund PAG are among the suitors in the race for these select business portfolios.

Wockhardt has a diversified product portfolio with presence in therapeutic segments such as cardiology, dermatology, diabetes, respiratory and ophthalmology.

Investment bank Moelis is advising Wockhardt on the sale process.

How these talks shape up in coming days remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

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