Sensex Ends 151 Points Lower; Healthcare & Energy Stocks Witness Selling
Closing

Indian share markets witnessed selling pressure throughout the day and ended marginally lower. Barring IT sector, all sectoral indices ended on a negative note with stocks in the healthcare sector, energy sector and capital goods sector witnessing maximum selling pressure.

At the closing bell, the BSE Sensex stood lower by 151 points (down 0.4%) and the NSE Nifty closed down by 55 points (down 0.5%). The BSE Mid Cap index and the BSE Small Cap index ended the day down by 1.5%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was down up 0.6% and the Shanghai Composite was up by 1.4%. The Nikkei 225 was down 2%.

The rupee was trading at 71.15 against the US$.


Speaking of the Indian share markets, note that while the Sensex is below its all-time high level of August 2018, it is still above the level it traded a year ago.

And if you increase the time frame to five years, you will realise that the Sensex has gained about 73%, compounding at an annual rate of 11.6% (excluding dividends).

And how has the valuation of the index has moved over the last five years?

The chart below shows how the Sensex price to earnings ratio has moved over the last five years...

The Sensex Is Far from a Bargain Yet

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

  • As you can see, the Sensex price to earnings ratio has mostly been in a rising trend over the last five years, except some intermittent declines.

    So, looking at the Sensex valuations, the markets don't appear attractively priced right now. But as I've mentioned time and again, the Sensex tells a very a selective, skewed story of just the 30 largest companies.

    It does not reflect the conditions of the broader markets, which have witnessed quite a tumultuous ride. Consequently, the rest of the markets also have more attractive buying opportunities than the Sensex companies.

Moving on, market participants were tracking Eicher motors share price, SpiceJet share price, Motherson Sumi share price, and Care ratings share price as these companies announced their December quarter results later today.

You can also read our recently released Q3FY19 results of other companies here: Reliance Industries, Infosys, TCS, Trident, HDFC bank, Maruti Suzuki, Tata Steel.

From the automobile sector, Tata Motors share price was also in focus today. The scrip of the company witnessed selling pressure in early trade today after tracking a sharp fall in American depository receipts (ADRs) on Friday.

The stock of the company was also in focus as Tata Motors reported the biggest ever quarterly loss by an Indian company at Rs 269.6 billion for the third quarter ended December 31.

Most of the losses were seen on the back of asset impairment in its British arm Jaguar Land Rover (JLR).

The auto major said profit was impacted by an exceptional item of asset impairment in its British arm Jaguar Land Rover (JLR) of Rs 278.4 billion (3.1 billion pounds).

Total revenue from operations, however, rose 4.4% to Rs 775.8 billion as compared to Rs 743.4 billion in the year-ago period.

Speaking of automobiles sector, all the components of BSE Auto index have fallen. Tata Motors have crashed over 60% and Motherson Sumi Systems have plunged over 40% in past one year. While, Bharat Forge, Ashok Leyland and Maruti Suzuki fell over 30% during the same period.

But, one thing we must keep in mind is that not all auto companies will make money over time. And also, you shouldn't stay away from auto stocks altogether.

Even Tanushree Banerjee, Co-head of research at Equitymaster, believes that there are businesses in this sector that you cannot ignore. She is particularly talking about the blue-chip auto stocks.

Here's Tanushree...

  • One out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space. They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

    Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times.

    This could be the opportunity long term investors were waiting for.

In the news from the commodity space, crude oil witnessed selling pressure today. Crude oil prices fell around 1% as US drilling activity picked up and as Russia's biggest oil producer pressured President Vladimir Putin to end the supply cut deal with Middle East-dominated producer club OPEC.

Also, speaking of crude oil, India's state-run fuel marketers suffered their highest inventory loss in at least five years in the December-ended quarter due to a sharp fall in crude oil prices.

As per a leading financial daily, the combined inventory loss incurred by the three listed oil retailers-Indian Oil Corporation Ltd (IOL), Hindustan Petroleum Corporation Ltd (HPCL), and Bharat Petroleum Corporation Ltd (BPCL) - rose to Rs 175 billion in the abovementioned three-month period.

This was seen largely due as brent crude oil prices declined from their peak of US$ 86.3 per barrel to US$ 50.5 per barrel in the quarter ended December due to oversupply concerns amid slow demand growth.

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


Sensex Trades Marginally Lower; M&M and ONGC Top Losers
12:30 pm

Share markets in India are presently trading on a negative note. Barring IT sector, all sectoral indices are trading in red with stocks in the healthcare sector, metal sector and energy sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 116 points (down 0.3%), while the NSE Nifty is trading down by 50 points (down 0.5%). The BSE Mid Cap index is trading down by 1.3% and the BSE Small Cap index is trading down by 1.4%.

The rupee is trading at Rs 71.18 against the US$.

Market participants are tracking Eicher motors share price, SpiceJet share price, Motherson Sumi share price, and Care ratings share price as these companies are set to announce their December quarter results later today.

You can also read our recently released Q3FY19 results: Reliance Industries, Infosys, TCS, Trident, HDFC bank, Maruti Suzuki, Tata Motors, Tata Steel.

In the news from the pharma sector, Glenmark Pharma share price is in focus today as the company's subsidiary, Glenmark Pharmaceuticals Inc., USA (Glenmark) has been granted final approval by the United States Food & Drug Administration (USFDA) for Sevelamer Hydrochloride Tablets, 400 mg and 800 mg.

According to sales data for the 12-month period ending December 2018, the Renagel Tablets, 400 mg and 800 mg market achieved annual sales of approximately $102.1 million.

In another news, Aurobindo pharma share price is also in focus today as the company has closed the acquisition of Apotex's commercial operations and certain supporting infrastructure in five European countries.

The agreement to acquire five of Apotex's businesses which include infrastructure, personnel, products, certain established trademarks was announced last year on July 14.

Aurobindo pharma share price is presently trading down by 0.8%.

Moving on to the news from the automobiles sector, M&M share price is witnessing selling pressure today as the management revised its tractor volume guidance lower to 10% from earlier lower band of 12-14%.

The company posted 60% YoY growth in net profit at Rs 14.8 billion in December 2018 quarter (Q3FY19) against Rs 9.2 billion in year ago quarter.

The revenues grew 12% at Rs 128.9 billion in Q3FY19 against Rs 114.9 billion in Q3FY18.

The company's operating profit margins were lower by 150 basis points at 13.2% during the quarter against previous year of 14.7% on account of commodity cost pressure, higher discounts and new launch expenses.

Reportedly, the earnings were boosted by robust growth in tractors even as higher raw material expenses and high discounts in passenger vehicles and lower commercial vehicles sales weighed on its margins.

Last month, the company said that it has sold 17,404 units of tractors in December, down 6% as compared to 18,488 units sold in the same month last year.

The company's total sales on the automotive business front remained flat with 39,755 units sold in December buoyed by strong performance in exports. It had sold 39,200 units sold in the same month of the previous year.

M&M share price is presently trading down by 3.4%.

In another news, Hero MotoCorp share price is also in focus today.

The country's largest two-wheeler maker posted operationally disappointing numbers in Q3FY19. On a year-on-year (YoY) basis, net operating revenue clocked a subdued growth of 7.5% driven by a weak volume growth of 5.3%.

You can read Hero MotoCorp Q3FY19 result analysis on our website.

Speaking of the auto sector, India's auto sales slowed down in last two months due to weak consumer sentiment because of high interest rate, a spike in fuel price and insurance cost and liquidity crunch.

During H1 of FY18, the sector grew 11% in which CV & tractor segment expanding 34% and 13% while PVs grew by only 7%. On the other hand, higher rural participation has led the 2-wheeler & 3-wheeler segments to grew 36% and 10%.

Also, it is interesting to note that one out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space.

They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times. This is evident in the chart below:

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Tanushree Banerjee, Co-head of Research at Equitymaster believes, this could be the opportunity long term investors were waiting for.


Sensex Opens Lower; Automobile Stocks Drag
09:30 am

Asian stock markets started the week on the backfoot today as worries about global growth, US politics and the ongoing Sino-US tariff war kept investors cautious. Meanwhile, the benchmark S&P 500 index and the Nasdaq edged upward to snap a two-day losing streak on Friday as positive corporate results offset lingering skepticism over the United States and China reaching a trade deal before the March 1 deadline.

Back home, India share markets opened lower. The BSE Sensex is trading down by 141 points while the NSE Nifty is trading down by 50 points. Both, BSE Mid Cap index and BSE Small Cap index opened down by 0.4%.

All sectoral indices are witnessing selling pressure in the opening session with automobiles stocks and capital goods stocks leading the losers.

The rupee is currently trading at Rs 71.16 against the US$.

In the latest development, Foreign investors have infused close to Rs 53 billion in the Indian equity markets in the last six trading sessions, mainly on expectations of higher economic growth.

This comes following a pullout of Rs 52.6 billion by foreign portfolio investors (FPIs) in January.

Prior to that, they had put in Rs 58.8 billion in the stock markets during November-December 2018.

According to data available with depositories, FPIs put in a net amount of Rs 52.7 billion in equities during February 1-8. However, they pulled out a net sum of Rs 28 billion from the debt market during the period under review.

Indian equities have had a tough time in the past one year. With elections around the corner, volatility in the markets has been on a constant rise.

Till date in FY18-19, foreign investors have pulled out around Rs 515 billion from the Indian equity market.

In the past, such panic would have meant the domestic investor would have followed suit.

That hasn't happened this time.

Domestic investors have shown surprising resiliency to the market's volatility.

The month-wise SIP in FY18-19 has seen a constant rise.

Also, close to 1 million new SIP accounts have been added during FY18-19 according to AMFI.

Rising Retail Particpation Even In A Falling Market

The days of knee-jerk panic withdrawals by individual investors are slowly but surely reducing. If they ride out this volatility, they will see the benefit of the cycle turning in their favor.

That will mark a significant change in the mindset of the retail investor for the long term.

Moving on to the news from pharma sector. Lupin on 9 February said it got two observations from US drug regulator for its crucial Goa manufacturing site, which is under warning letter.

The inspection was carried out between 28 January to 8 February 2019. At the end of every inspection, the USFDA issues its observations on any deviations from current good manufacturing practices (cGMP) on Form 483.

Lupin's Goa site, along with Unit 2 manufacturing plant in Pithampur, Indore are under USFDA's warning letter since November 2017.

Towards the end of last month Unit 2 plant in Pithampur received six observations from USFDA.

The US drug regulator, after inspecting the two sites in 2017, and expressed concerns over quality control procedures that include handling of out-of-specification (OOS) results and conducting hold-time studies.

Lupin completed an extensive remediation at both of its plants and invited the USFDA for re-inspection.

In another development, Dr. Reddy's Laboratories in its filing to the exchanges informed that the US Food and Drug Administration (USFDA) has issued form 483 with 11 observations for its manufacturing facility in Hyderabad.

Observations have been issued after the audit of formulations Manufacturing Plant-3 at Bachupally, the reports noted.

Lupin share price opened the day down by 0.7%, while Dr. Reddy's share price opened down by 3.1%.

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


Sensex Ends Day in Red, Tata Motors in Focus, and Top Stocks in Action
Pre-Open

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

The BSE Sensex closed lower by 425 points to end the day at 36,547. While the broader NSE Nifty ended down by 126 points, to end the day at 10,944 points.

Among BSE sectoral indices, auto stocks fell the most by 3.4%, followed by metal stocks at 3.3%. Tata Motors and Vedanta were among the top losers.

Top Stocks in Action Today

Tata Motors share price will be in focus after the company declared the biggest ever quarterly loss by an Indian company at Rs 269.6 billion for the third quarter ended December 31, hit by asset impairment in its British arm Jaguar Land Rover (JLR).

The auto major said profit was impacted by an exceptional item of asset impairment in its British arm Jaguar Land Rover (JLR) of Rs 278.4 billion (3.1 billion pounds).

Total revenue from operations, however, rose 4.4% to Rs 775.8 billion as compared to Rs 743.4 billion in the year-ago period.

Cadila Healthcare share price is likely to be in focus today as the company received the final approval from the United States Food and Drug Administration (USFDA) to market Carbamazepine Extended-Release Tablets in various strengths.

Reportedly, it will be manufactured at the group's formulations manufacturing facility at Moraiya, Ahmedabad in the state of Gujarat.

This medication is used to treat certain types of seizures (partial, generalized tonic-clonic, mixed) and certain types of nerve pain (trigeminal and glossopharyngeal neuralgia).

Automobile Sales Under Pressure

Passenger vehicle sales continued to remain under pressure in the new year with wholesale volumes falling 1.9% to 280125 units in January.

As per data with industry body Society of Indian Automobile Manufacturers (SIAM), sales of passenger vehicles stood at 285467 units in the year-ago period.

Sales of commercial vehicles increased marginally by 2.2% to 87591 units.

Three-wheeler sales fell 13.6% to 54043 units in the period under review.

Increase in ownership costs also hurt demand for two-wheelers which declined 5.2% to 1.5 million units in January. While sales of motorcycles dropped 2.6% to 1.02 million units, those of scooters slid 10.2% to 497,169 units.

Overall, sales of vehicles across categories declined 4.7% to 2.02 million units.


Speaking of automobiles sector, all the components of BSE Auto index have fallen. Tata Motors have crashed over 60% and Motherson Sumi Systems have plunged over 40% in past one year. While, Bharat Forge, Ashok Leyland and Maruti Suzuki fell over 30% during the same period.

But, one thing we must keep in mind is that not all auto companies will make money over time. And also, you shouldn't stay away from auto stocks altogether.

Even Tanushree Banerjee, Co-head of research at Equitymaster believes that there are businesses in this sector that you cannot ignore. She is particularly talking about the blue-chip auto stocks.

Here's Tanushree:

  • One out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space. They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

    Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times.

    This could be the opportunity long term investors were waiting for.