Sensex Opens Higher; Telecom and Energy Stocks Gain

Mon, 18 Nov 09:30 am

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Asian share markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.2% while the Hang Seng is up 1.1%. The Nikkei 225 is trading up by 0.3%. Wall Street's main stock indices closed at record levels on Friday, fueled by fresh optimism over a potential calming of US-China trade tensions and by big gains in shares of healthcare companies.

Back home, India share markets opened higher. The BSE Sensex is trading up by 137 points while the NSE Nifty is trading up by 36 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.4% and 0.3% respectively.

All sectoral indices have opened the day in green with telecom stocks and energy stocks witnessing buying interest.

The rupee is currently trading at 71.64 against the US$.

Speaking of the Sensex touching record high, how expensive is the Sensex at current levels? What has the trend been in recent years?

It would be interesting to see how the valuation of the index has moved over the last five years.

The chart below maps the price to earnings ratio of the Sensex from October 2014 to now.

How Pricey Is the Sensex Now?

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

• It is worth noting that the Sensex has gained 44% over the last five years, compounding at an annual rate of 7.6% (excluding dividends).
  
  Not quite impressive.
  
  During the same period, the Sensex price to earnings ratio has mostly been in a rising trend, except some intermittent declines.
  
  Between October 2014 and now, the gain in the Sensex price to earnings ratio is 42%. That means that the gains in the index have mostly come from expansion in the valuation multiple, and just meagerly from increases in earnings.

So, before taking the current market bullishness for granted, do weigh in the fact that the Sensex is quite expensively priced.

Also, amid the mood swings of Mr. Market witnessed lately, Tanushree Banerjee in the video below talks about the Rebirth of India phenomenon and how 3 specific trends are racing ahead even in these gloomy times.

Tune in to find out more...

In the news from the economy. Exports of goods declined for the third month in a row in October 2019 to US$26.4 billion posting a 1.1% fall year-on-year (YoY) with sectors such as petroleum products, leather, readymade garments, carpets and a wide range of farm products taking a hit.

The fall in imports in October 2019 was at a steeper 16.3% to US$37.4 billion which narrowed the country's trade deficit to US$ 11 billion compared to US$18 billion in October 2018.

There were, however, a number of labor-intensive sectors, such as gems & Jewellery, engineering goods, drugs & pharmaceuticals and marine products, where exports increased during the month, although marginally, indicating a possible recovery in demand in the months ahead.

In April-October 2019-20, exports fell 2.4% to US$186 billion while imports declined 8.4% to US$280.7 billion.

Trade deficit narrowed to US$94.7 billion in April-October 2019 compared to US$116.2 billion in April-October 2018.

In October 2019, petroleum imports declined 31.7% to US$9.6 billion while gold import increased 4.7% to US$1.83 billion.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Zydus Cadila received a tentative approval from the US health regulator to market generic Apremilast tablets.

The company has received the tentative approval from the United States Food and Drug Administration (USFDA) to market the tablets in the strengths of 10 mg, 20 mg, and 30 mg.

This medication is used to treat psoriatic arthritis and moderate to severe plaque psoriasis. It is also used to treat mouth sores in people who have Behcet's disease.

The tablets will be manufactured at the group's manufacturing facility at SEZ, Ahmedabad, the reports noted.

The group now has 276 approvals and has so far filed over 360 ANDAs since the commencement of its filing process.

Cadila Healthcare share price opened the day up by 1.7%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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