Sensex Ends 161 Points Lower; Telecom and Metal Stocks Witness Selling
Closing

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Indian share markets witnessed selling pressure throughout the day and ended lower, tracking weakness in global markets owing to coronavirus outbreak.

The BSE Sensex stood lower by 161 points, while the NSE Nifty closed down by 53 points.

The BSE Mid Cap index ended the day down by 0.6%, while the BSE Small Cap index ended down by 0.5%.

Sectoral indices ended on a mixed note with stocks in the telecom sector and metal sector witnessing most of the selling pressure, while IT stocks witnessed buying interest.

Asian stock markets tumbled further amid concerns over the coronavirus outbreak that has slowed production and weakened demand in China.

The death toll from China's coronavirus epidemic climbed to 1,868, while the total number of confirmed cases jumped to 72,436.

As of the most recent closing prices, the Hang Seng was down 1.5% while the Nikkei was down 1.4%.

The rupee was trading at 71.48 against the US$.

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In news from financial markets space, SEBI Chairman Ajay Tyagi said that the markets regulator is actively looking at recategorization of midcap and smallcap stocks for the mutual funds. SEBI Chief had made a similar comment earlier this month.

To ensure uniformity, the market regulator in 2017 issued a list defining largecap, midcap and smallcap companies. The list is being prepared once in six months by industry body AMFI in consultation with SEBI and stock exchanges.

Besides, to help investors make accurate comparison of schemes, SEBI categorized and rationalised mutual funds schemes.

The whole process was completed by mutual fund houses by June 2018, in which some schemes were merged while a few others saw changes in fundamental attributes.

Active fund managers claim that the categorization had taken away their flexibility to invest, resulting in money flowing into a set of stocks, impacting mutual fund scheme performances.

What effect the above classification will have on Indian stocks remains to be seen. We will keep you updated on all the news from this space.

Speaking of mutual funds, Tanushree Banerjee wrote to you about an irreversible megatrend in the mutual funds space. It is the growth in the assets under management (AUM) of the Indian mutual fund industry.

This is evident in the chart below...

New High for Mutual Fund AUM

Here's what Tanushree wrote about it in yesterday's edition of The 5 Minute WrapUp...

  • After a few hiccups in the first half of this fiscal, strong inflows into mutual funds have taken the industry's AUM to a new high.

    Can we call it a saturation point?

    Far from it!

    The total AUM of India's mutual fund industry is just about 13% of India's GDP.

    This megatrend of financialisation of savings has a long runway ahead of it.

This is one of the megatrends that will help what Tanushree calls the Rebirth of India.

She has identified the 7 best stocks that will profit from the Rebirth of India. You can read about these top 7 stocks here.

Moving on to news from the commodity space, crude oil was witnessing selling pressure today. Losses were seen on lingering concerns over the economic impact of the coronavirus outbreak in China and its effect on oil demand, tracking losses in financial markets.

The International Energy Agency (IEA) said last week the virus was set to cause oil demand to fall by 435,000 barrels per day (bpd) year-on-year in the first quarter, in what would be the first quarterly drop since the financial crisis in 2009.

However, with some Chinese independent refineries snapping up crude supplies after being absent from the market for weeks, markets held out hopes that China's demand could recover in coming months.

Market participants are also anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.

We will keep you updated on how these developments pan out in the coming days. Stay tuned.

Speaking of crude oil, where do you think are oil prices headed? And what does it mean for the Indian markets?

Well, India's no.1 trader, Vijay Bhambwani shares his insights and updates on his YouTube channel regularly.

In one of his videos, he talks about how you can hedge against the rising crude oil prices and also gives a perspective as to what's actually happening in this space.

Tune in to find out more...

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


Sensex Slips 400 Points; IndusInd Bank & Tata Steel Top Losers
12:30 pm

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Share markets in India are presently trading on a negative note. Benchmark indices fell nearly 1% today tracking weakness in global markets owing to coronavirus outbreak.

All sectoral indices are trading on a negative note with stocks in the telecom sector, metal sector and power sector witnessing most of the selling pressure.

The BSE Sensex is trading down by 396 points (down 0.9%), while the NSE Nifty is trading down by 122 points (down 1%).

The BSE MidCap index is trading down by 1.3%, while the BSE SmallCap index is trading down by 1.4%.

The rupee is currently trading at 71.42 against the US$.

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Speaking of Indian share markets, we've been telling you about the rebound in smallcap stocks in 2020 for quite some time now.

And the market trend since the start of 2020 tells us, it's already happening!

Have a look at the chart below:

Smallcaps Are Way Ahead of the Sensex in 2020

As you can see, since the start of 2020, smallcaps have beaten largecaps by a wide margin.

But this is just the start.

We believe smallcaps have a long way to go.

You can make good gains with a careful selection of smallcap stocks and long-term horizon.

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, fundamentally strong smallcap stocks will not only survive but thrive in the long term.

She has narrowed down on one such smallcap stock.

You can access the report here (requires subscription). And if you're not an Hidden Treasure subscriber, here's where you sign up.

Also, in the video below she talks about the ongoing economic slowdown, an upcoming rebound in the small cap space, and her number 1 stock pick for 2020.

Tune in to know more...

Moving on, as per a leading financial daily, India's tyre industry is worried over the continuing shortage of natural rubber in the market at a time when the automobile sector is showing signs of revival.

As per the news, the Rubber Board had estimated a 10% year-on-year (YoY) increase in natural rubber production in the eight months to November 2019.

If the stock has not reached the market, it means the growers are holding it, industry insiders said.

But Josch Joseph, secretary at Consortium of Indian Rubber Growers Association, disagreed. As per him, the growers do not have the capacity to hold for a long time.

Joseph said delays in payment of arrears under the Kerala government's price incentive scheme seems to have discouraged small growers from going for tapping.

The shortage is expected to get worse as the tapping season in the main producing state of Kerala is coming to a close. Rubber yield has already started falling with an increase in temperature, pushing prices up.

Note that since December, the tyre industry has been importing more rubber to bridge the demand-supply gap, which they expect to widen further in the coming days with the revival in the automobile sector.

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

Speaking of auto sector, Tanushree Banerjee is counting on two listed automobile companies from the Indian market. The Rebirth of India stocks she has identified, are set to leave their mark on the global EV revolution.

These stocks may not have the 4x vertical ride like Tesla within a few months.

But for patient investors, these are the stocks which will soar like Tesla, more gradually.

As per Tanushree, now is the right time to buy these stocks to profit from the Rebirth of India. You can read about them here.

In news from the financial markets space, Indian stock market regulator said there will be segregation of advisory and distributing activities for investment advisers.

The segregation will be at client level to avoid conflict of interest. It added that an individual investment adviser cannot provide distribution services.

In a press release, the market regulator said it will introduce upper limit on the fees charged to investors by investment advisers.

It said that there will be enhanced eligibility criteria for registration as an investment advisor including net worth, qualification and experience requirements.

The existing individual investment advisers will be grandfathered from complying with the enhanced qualification and experience.

There will be a mandatory agreement between an investment advisor and client for key terms and conditions.

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

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


Sensex Opens Lower; Realty and Power Stocks Under Pressure
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 0.4% while the Hang Seng is down 1.3%. The Nikkei 225 is trading down by 1.2%.

Back home, India share markets opened lower. The BSE Sensex is trading down by 135 points while the NSE Nifty is trading down by 61 points. The BSE Mid Cap index opened down by 0.5% while BSE Small Cap index opened down by 0.3%.

All sectoral indices have opened the day on a negative note with realty stocks and power stocks witnessing maximum selling pressure.

The rupee is currently trading at 71.41 against the US$.

The Indian rupee appreciated by 8 paise to settle at 71.29 against the US dollar on Monday, helped by some moderation global crude prices.

However, stronger US dollar against key rival currencies and subdued domestic equities kept the rupee's rise in check.

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At the interbank foreign exchange market, the rupee started on a weak note at 71.45 against the US dollar. During the session, it swung between a low of 71.48 and a high of 71.24.

Speaking of currencies, Vijay Bhambwani, editor of Weekly Cash Alerts, tells you the main reasons why not to trade commodities and currencies the same way you would trade equities. Here's an excerpt of what he wrote...

  • Currencies are traded in pairs and the most liquid is the USDINR. Currencies are traded in four decimal points just as bonds are. The international derivative trader's association has indicated that forex may be traded in 6 decimals in the coming few years.

    It takes months sometimes for the currency pair to pass the next round figure, say from 70 to 71.

    Can you really trade commodities and currencies alike or for that matter, equities and currencies alike? Definitely not!

To know more, you can read Vijay's entire article here: Is Trading in Equities, Commodities, and Currencies the Same?

Moving on to the news from IPO space. SBI Cards and Payment Services, the credit card unit of the country's largest lender State Bank of India (SBI), has received markets regulator's go-ahead to float an initial public offering.

As per the draft papers, SBI Cards will offer up to 130.5 million equity shares through offer for sale route.

This will include up to 37.3 million share sale by SBI and up to 93.2 million shares on offer by Carlyle Group.

In addition, the company will also issue fresh equity shares of Rs 5 billion.

How this IPO sails through remains to be seen. Stay tuned for more updates from this space.

Speaking of IPOs, in one of the editions of The 5 Minute WrapUp, Ankit Shah shared how IPOs offer insights into the mood of the stock markets.

He picked the six most successful IPOs of 2019 and checked the retail investor enthusiasm for them.

Obviously, all these IPOs were oversubscribed across investor categories. But the level of retail investor enthusiasm differed widely, depending on the overall market sentiments. This can be seen in the chart below:

Are Retail Investors Back in the IPO Game?

Here's what Ankit wrote about it...

  • Clearly, IRCTC witnessed the highest number of bids for the retail category. Factoring in the discount of Rs 10 per share for the retail category, the total bids were worth a whopping Rs 3,242 crore. Over five times the entire IPO size!

    Polycab India and the recent IPO of CSB Bank also received a strong thumbs-up from retail investors.

Does this hint that retail investors are coming back to the markets? Could we witness of flurry of IPOs in the coming months?

It would be interesting to see how this trend pans out in the coming months.

Ankit keeps a tab on all the IPOs at his premium newsletter Equitymaster Insider (requires subscription).

In one of his recent articles, he has explained why keeping a tab on the IPO market is vital to your overall investing goals. You can read it here: What I Learnt from IPOs in 2019 (requires subscription).

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


Moody's GDP Growth Forecast, Slump in Equity Mutual Fund Inflows, and Top Cues in Focus Today
Pre-Open

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India share markets witnessed selling pressure during closing hours yesterday and ended on a negative note.

At the closing bell yesterday, the BSE Sensex stood lower by 202 points (down 0.5%) and the NSE Nifty stood down by 67 points (down 0.6%).

The BSE Mid Cap index ended the day down 0.9%, while the BSE Small Cap index stood down by 1%.

Stocks in the oil & gas sector and power sector witnessed huge selling pressure, while consumer durable stocks were trading in the green.

Speaking of Indian share markets, we've been telling you about the rebound in smallcap stocks in 2020 for quite some time now.

And the market trend since the start of 2020 tells us, it's already happening!

Since the start of 2020, smallcaps have beaten largecaps by a wide margin.

But this is just the start.

We believe smallcaps have a long way to go.

You can make good gains with a careful selection of smallcap stocks and long-term horizon.

{inlineads1}

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, fundamentally strong smallcap stocks will not only survive but thrive in the long term.

She has narrowed down on one such smallcap stock.

You can access the report here (requires subscription). And if you're not an Hidden Treasure subscriber, here's where you sign up.

Also, in the video below she talks about the ongoing economic slowdown, an upcoming rebound in the small cap space, and her number 1 stock pick for 2020.

Tune in to know more...

Equity Mutual Fund Inflows Witness a Sharp Decline

Investors poured nearly Rs 120 billion into equity oriented mutual funds in the three months ended December 2019, a sharp slump of 50% from the preceding quarter.

All categories of equity funds, including large-cap, mid-cap, small-cap and dividend yield funds saw a drop in flows compared to the preceding quarter.

Total flows in equity mutual funds stood at Rs 118.4 billion for the December quarter as against Rs 238.7 billion in the September quarter.

During the April-June quarter, inflows in such schemes stood at Rs 175 billion.

Meanwhile, the asset base of equity funds rose 6% to Rs 7.7 lakh crore for the quarter ended December.

Reportedly, over 30% of the net equity flows have been directed toward the large-cap category, as this segment has been the most resilient over the past year and delivered good returns.

However, inflows in large-cap funds plunged by 42% to Rs 35 billion for the quarter under review, from Rs 60 billion seen in July-September.

Mid-cap funds saw infusion of Rs 26.9 billion in the quarter under review, from Rs 37.4 billion in the preceding three months.

The flows in the small-cap category halved to Rs 13.6 billion, from Rs 30.4 billion in the September quarter.

Speaking of the mutual fund industry, note that the Indian mutual fund industry is a high growth sector.

In fact, the growth rate over the last five years has been even higher. The chart below shows the trend in mutual fund AUMs since FY14.

Mutual Fund AUM Tripled in Just 5 years

Over the last five years, mutual fund AUMs have nearly tripled, growing at 23.5% CAGR.

Recently, NSE-backed Computer Age Management Services (CAMS) filed a draft red herring prospectus with the market regulator. CAMS is the largest registrar and transfer agent (RTA) for mutual funds in India.

Being the largest registrar and transfer agent for mutual funds, CAMS is a direct beneficiary of the twin megatrends of financialisation and digitalisation.

Ankit is closely tracking this IPO and will be sharing his views at his premium newsletter Equitymaster Insider (requires subscription).

He's also closely watching the IPO trend in 2020 and is going to pick all the profitable IPOs for his readers at Equitymaster Insider. In one of his recent articles, he has explained why keeping a tab on the IPO market is vital to your overall investing goals. You can read it here: What I Learnt from IPOs in 2019 (requires subscription).

Indian Exports Fall for Sixth Straight Month in January

India's exports dropped 1.7% to US$26 billion in January, the sixth straight month of contraction, on account of a significant fall in shipments of petroleum, plastic, carpet, gems and jewellery, and leather products.

According to the government data released, imports also fell for the eighth consecutive months, down 0.8% to US$41.1 billion in January, widening the trade deficit to a seven-month high of US$15.2 billion.

Gold imports shrunk by about 9% to US$1.6 billion during the month under review.

Last time, it was in June 2019 when the trade deficit aggregated at US$15.3 billion.

Of the 30 key sectors, as many as 18 segments showed negative growth in exports during the month.

Shipments of petroleum products, plastic, carpet, gems and jewellery, and leather products contracted by 7.4%, 10.6%, 5.2%, 6.9%, and 7.6% respectively, in January.

The country's outbound shipments have remained subdued so far this year. It may have a bearing on the overall economic growth, which is pegged at 5% for the current financial year.

Industrial output declined by 0.3% in December 2019 due to poor performance mainly by manufacturing.

In January, while crude oil imports grew 15.3% to US$ 13 billion, non-oil imports fell by 6.7% to US$28.2 billion.

Cumulatively, during the April 2019-January 2020 period, exports were down 1.9% to US$265.3 billion, while imports contracted by 8.1% to US$398.5 billion.

Trade deficit during the period narrowed to US$133.3 billion as against US$163.3 billion in April-January 2018-19.

Meanwhile, an RBI release showed that services export for December 2019 stood at about US$20 billion while imports were at US$12.6 billion.

How these numbers pan out in the coming months remains to be seen. Meanwhile, we will keep you updated on all the news from this space.

Moody's Cuts 2020 GDP Growth Forecast

Moody's Investors Service slashed its 2020 growth projection for India to 5.4% from 6.6% forecast earlier. The forecast is lowered amid growing concerns over the economic fallout of the novel coronavirus outbreak.

The agency expects a shallower recovery in Asia's third-largest economy given that global growth will likely take a hit following the virus outbreak in China.

It stated that improvements in the latest high frequency indicators such as PMI data suggest that the economy may have stabilized. While the economy may well begin to recover in the current quarter, the agency expects any recovery to be slower than it had previously expected. Accordingly, it has revised its India's growth forecasts to 5.4% for 2020 and 5.8% for 2021, down from the previous projections of 6.6% and 6.7%, respectively.

Moody's also reduced its global growth projection, saying that the coronavirus outbreak has diminished optimism about prospects of an incipient stabilization of global growth this year.

In China's Hubei province, the epicenter of the outbreak, about 1,933 new cases and 100 deaths were reported on 16 February, the lowest daily death count since 11 February.

Death toll in mailand China touched 1,770 as of the end of Sunday, with total confirmed cases at 70,548.

The rating agency said with the virus continuing to spread, it is still too early to make a final assessment of the impact on China and the global economy.

It has revised global GDP growth forecast down, and now expects G-20 economies to collectively grow 2.4% in 2020, a softer rate than last year, followed by a pickup to 2.8% in 2021.

For India, Moody's said, a key to stronger economic momentum would be the revival of domestic demand, both rural and urban. It also stated that the resumption of credit growth in the economy is equally important.

We will keep you updated on all the news from this space. Stay tuned.

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