Sensex Opens Strong; PSU & Realty Stocks Lead

Thu, 13 Dec 09:30 am

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Asian stock markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 1% while the Hang Seng is up 1.3%. The Shanghai Composite is also trading up by 1.3%. US stocks closed up on Wednesday afternoon, though well below their session highs as investors pulled back in the last few minutes of trading despite optimism about US-China trade relations and some reassuring signs in British politics.

Back home, India share markets opened strong today. The BSE Sensex is trading up by 248 points while the NSE Nifty is trading up by 65 points. The BSE Mid Cap index opened the day up by 1% while BSE Small Cap index opened up by 0.9%.

All sectoral indices have opened the day on a positive note with PSU stocks and realty stocks witnessing maximum buying interest.

The rupee is currently trading at Rs 71.62 against the US$.

Speaking of benchmark indices, if we check how the BSE-Sensex performed compared to BSE-Midcap and BSE Smallcap during downturns.

We get this result.

The starting point of this exercise was the economic downturn of 2008.

During this time, the BSE-Sensex was down 38% compared to -54% and -59% of BSE-Mid and BSE-Small index respectively.

Similarly, during the period of 'policy paralysis' of 2011-12, the large-cap index outperformed both the indices.

FY16 was an exception where the large-cap index underperformed.

Nevertheless, during the current calendar year, the BSE-Sensex outperformed by a wide margin and is currently giving a positive return of 6% compared to -17% and -27% of BSE-Mid and BSE-Small indices respectively.

Clearly, in the face of such volatility, you need a balance of growth and safety. Safe stocks will offer you that safety.

To get started, I recommend Tanushree's special report - 7 Stocks To Profit From This Market Crash.

If you are a StockSelect subscriber, you can read the report here.

If you want to access to this special report, all you need to do is sign up here.

In the news from the economy. As per the latest data released by the Central Statistics Office (CSO), two key indicators of macro economy, industrial production and retail price inflation improved their performance in October and November, respectively.

Industrial activity grew at an 11-month high of 8.1% in October, while the retail inflation rate fell to a 17-month low of 2.33% in November.

With inflation consistently undershooting the Monetary Policy Committee's target, it increases the likelihood of a change in policy stance from calibrated tightening to neutral, which could serve as a precursor to a rate cut.

Reserve Bank of India Governor Shaktikanta Das will chair the next monetary policy committee meeting in February.

The index of industrial production rose from 4.5% in September, with the major sectors registering strong growth. Manufacturing grew 7.9% in October, from 4.6% in September. Electricity generation and mining output increased by 10.8% and 7% respectively. Capital goods grew by 16.8%.

Further, the consumer price index (CPI) fell from 3.38% in October, on the back of falling food prices, correction in retail fuel prices and the waning impact of the Housing Rent Allowance revision.

The consumer food price index contracted by 2.61% in November, with major segments such as vegetables, pulses and sugar contracting.

It must be noted that, the Reserve Bank of India's (RBI) monetary policy statement is one of the most tracked events in the financial world. With both core and retail inflation easing to new lows, a rate cut in key interest rates is widely expected.

Rate cut or not, we at Equitymaster, 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 pharma sector. Lupin share price is in focus today after the company said a court in Europe has upheld a decision to impose a fine of 40 million euros (over Rs 3.3 billion) on the company by European Commission (EC).

It involves a litigation over blood pressure lowering drug Perindopril.

The company said the General Court of the European Union has delivered its judgment concerning Lupin's and other companies appeal against the EC 2014 decision in the Perindopril litigation.

Note that, the company added that it will study the court's judgment and evaluate further course of action.

In 2014, Lupin and Unichem Laboratories are among six global drug makers on which the European regulator had imposed a collective fine of 427.7 million euros for striking deals to prevent entry of cheaper version of blood pressure drug Perindopril in the EU.

To know more about the company, you can access to Lupin's Q2FY19 result analysis and Lupin's 2017-18 Annual Report Analysis on our website.

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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