Indian Indices End on a Strong Note; Sensex Ends Over 400 Points Higher
Closing

After opening the day on a flat note, Indian share markets witnessed most of the buying interest during closing hours and ended their trading session on a strong note. Gains were largely seen in the realty sector, IT sector and banking sector, while metal stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 413 points (up 1.1%) and the NSE Nifty closed higher by 125 points (up 1.1%). The BSE Mid Cap index ended the day up 1.1% and the BSE Small Cap index ended the day up by 1%.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.1% and the Shanghai Composite was down by 0.9%. The Nikkei 225 was down 1.6%.

The rupee was trading at 68.99 against the US$.

In the news from commodity space, crude oil witnessed selling pressure today. Losses were seen after data showed a surprising increase in US stocks.

As per the data reported by the US Energy Information Administration, US crude inventories rose last week by 2.8 million barrels. This came in much higher compared with analysts' expectations for a decrease of 1.2 million barrels.

These added 2.8 million barrels in the period comes a day after the American Petroleum Institute reported a surprising build in inventories.

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Note that the US-China trade deal, the OPEC cuts, and the US sanctions on Iran and Venezuela are continuing to dominate crude oil headlines.

Crude oil prices were near 2019 highs last week, supported by supply cuts led by producer club OPEC. Reportedly, US sanctions against oil producers Iran and Venezuela are boosting prices.

Last week, the OPEC scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled.

The OPEC and non-affiliated allies like Russia - known as the OPEC+ alliance - have been withholding around 1.2 million barrels per day (bpd) in crude supply from the start of the year to tighten markets and prop up prices.

US crude oil output has soared by more than 2 million barrels per day (bpd) since early 2018, to around 12 million bpd, making America the world's biggest producer ahead of Russia and Saudi Arabia.

On the demand-side, there is concern that an economic slowdown as well as improving energy efficiency and the emergence of alternative transport fuels will erode oil consumption.

In the news from the banking sector, Bank of Baroda (BoB) share price was in focus today. Stock of the lender witnessed buying interest after reports suggested that the bank is planning to raise funds by selling bonds overseas.

As per a leading financial daily, Bank of Baroda is set to raise up to US$ 1 billion by selling bonds overseas to solidify its capital position ahead of a likely jump in credit demand.

The bond sale would be known as Regulation S in market parlance, whereby bonds are offered to investors outside the US.

The bond sale is likely to open for subscription before this financial year comes to a close on March 31, the report further added.

In other news, stocks from the defence sector are witnessing buying interest after Prime Minister Narendra Modi announced India's acquisition of space capability to shoot down spy satellites.

The PM yesterday said India entered its name as an elite space power after an anti-satellite missile destroyed a live satellite in 3 minutes. The anti-satellite weapon, A-SAT, successfully targeted a live satellite on a low earth orbit.

Stocks such as Bharat Dynamics, BEML, Hindustan Aeronautics witnessed buying on the back of above news.

In his address, Modi said that 'Mission Shakti' is an important step towards securing India's safety, economic growth and technological advancement.

This announcement by Modi comes as a huge shot in the arm for the defence sector.

Currently, 35% of the country's total defence requirement are manufactured within the country. The rest is met through imports.

Events like Mission Shakti have shown what India can do in-house. I believe, a huge opportunity lies in wait for India's defence manufacturers.

Knowing that, how do you act on this, dear reader?

Tanushree has zeroed in on 3 stocks most likely to benefit from India's defence wave.

She believes that events like Mission Shakti are likely to be the norm rather than the exception in the near future.

Also, speaking of defence sector, note that India's defence allocation has nearly trebled in the past decade (from 2009-2019).

India's Increasing Allocation to The Defence Sector

However, most of the spending in the past decade was manpower related i.e. salary and pensions.

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

  • India needs a big push towards modernisation of its weapons.
    • The government's recent policies are aimed at rectifying two major issues.
    • Reducing India's over dependence on imports.
    • Expanding the defence budget to modernise existing equipment.
    India's recent tensions with its neighboring countries is likely to accelerate these initiatives. The players most likely to benefit are India's private sector defence manufacturers.

Sensex Trades Higher; HCL Technologies, Infosys Among Top Gainers
12:30 pm

Share markets in India are presently trading on a positive note. Barring energy sector, all sectoral indices are trading on a positive note with stocks in the realty sector, IT sector and FMCG sector witnessing maximum buying interest.

The BSE Sensex is trading up by 196 points (up 0.5%), while the NSE Nifty is trading up by 65 points (up 0.6%). The BSE Mid Cap index is trading up by 0.7% and the BSE Small Cap index is trading up by 0.8%.

The rupee is trading at Rs 68.92 against the US$.

In the news from the IT sector, Infosys share price is in focus today as the company has entered into a strategic partnership with ABN AMRO, the third largest bank in the Netherlands headquartered in Amsterdam.

Reportedly, this partnership strengthens Infosys' position as a leading technology and business process management provider across the mortgage services value chain, improving experience and operational efficiencies.

As part of the partnership, Infosys will acquire 75% of the shareholding in Stater N.V., a wholly owned subsidiary of ABN AMRO bank, that offers pure-play, end-to-end mortgage administration services in Netherlands, Belgium and Germany.

In another news, HCL Technologies is also in focus today. The IT company has signed 17 transformational deals during the quarter for another straight quarter driven by financial services, technology & services and manufacturing.

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Reports state that bookings in FY19 were 40% higher than FY18. Expectations for Q4FY19 are to be a healthy quarter on the back of healthy bookings and deal pipeline in 9MFY19.

HCL Technologies share price and Infosys share price are presently trading up by 3.2% and 1.6%, respectively.

You can also read HCL Tech Q3FY19 result analysis and HCL Tech Annual Report on our website.

Moving on to the news from the finance space, DHFL share price is witnessing buying interest today on reports that Piramal group and Baring Private Equity (PE) are in advanced stage of negotiations to acquire majority stake in the housing finance company.

As per an article in a leading financial daily, the company's Chairman and MD, Kapil Wadhawan had said the company has engaged with large potential entities to identify and on-board the right strategic partner and are in advanced stages of discussions to achieve the same over the next 90 days.

Last week, rating agency CRISIL downgraded its short-term rating on the commercial paper of DHFL to 'CRISIL A2+' from 'CRISIL A1'. Reportedly, the downgrade is driven by a significantly slower build-up of liquidity vis-a -vis earlier expectations because of challenges in timely closure of several high-visibility securitization and other fund-raising transactions over the past month.

DHFL has also stated its intention to take steps to raise additional funds and increase on-balance sheet liquidity, including securitization of home loans and sell-down of its developer loan exposures by March 31, 2019. Further, the company has also announced plans to induct a strategic investor.

DHFL share price is presently trading up by 11.1%.

Note that DHFL is also facing questions about its financial health after the IL&FS default pushed up the cost of funds for the mortgage lender and made borrowing difficult.

Speaking of non-banking financial companies (NBFCs), it is evident from the chart below that their credit growth has seen robust growth in recent years.

Is the NBFC Party in India Coming to an End?

From 2013-2017, NBFCs grew by 13% as compared to 5.4% for banks. A major reason for this is the gain in market share from public sector banks (PSBs). The recent NPA woes of the PSBs has seen them tighten up their credit lines.

The NBFCs have stepped in, along with private sector banks, to fill this gap. But the recent liquidity crisis at IL&FS has raised concerns over how long this growth will continue.

It would be interesting to see how this all pans out. Meanwhile, we will keep you updated on the latest developments from this space.


Sensex Opens Flat; Realty and IT Stocks Gain
09:30 am

Asian stock markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 1.5% while the Hang Seng is down 0.1%. The Shanghai Composite is trading down by 0.3%. US stocks eased on Wednesday as Treasury bond yields fell again and a prolonged inversion in the yield curve fanned fears of a US economic slowdown.

Back home, India share markets opened on a flat note. The BSE Sensex is trading up by 21 points while the NSE Nifty is trading up by 11 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.4% and 0.2% respectively.

Barring bank stocks and telecom stocks, all the sectoral indices have opened the day in green with realty stocks and information technology stocks leading the pack of gainers.

The rupee is currently trading at 69.02 against the US$.

The rupee weakened marginally by 2 paise to close at 68.88 against the US dollar on Wednesday amid strengthening of the American currency and robust selling in domestic equities.

Reportedly, increased demand for the US currency from importers weighed on the rupee. However, sustained foreign fund inflows and easing crude oil prices cushioned the fall.

At the Interbank Foreign Exchange (Forex) market, the domestic currency opened lower at 68.98 a dollar but soon pared some losses. It finally settled at 68.88 per dollar, down 2 paise over its previous close.

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On Tuesday, the rupee had appreciated by 10 paise to 68.86 following a robust response to RBI's maiden rupee-dollar swap auction.

Under the rupee-dollar swap auction conducted Tuesday, the Reserve Bank received bids for US$16.31 billion, against the notified amount of US$5 billion.

Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 14.8 billion on Wednesday.

Foreign investors are back in the news.

The recent surge in the Indian stock markets can be also attributed to the strong foreign investor inflows into Indian equities.

The chart reveals the monthly trend in foreign investor flows into Indian equities over the last five years. The period almost coincides with the term of the Modi government.

Are Foreign Investors Coming Back to Indian Equities?

During this period, you can see that foreign investor participation in Indian equities shrank.

Over the last five years, foreign investors were net sellers in 24 months. Effectively, foreign investors were net sellers 40% of the time.

The chart shows that the highest monthly net foreign investor inflow over the last five years was recorded in March 2017 at Rs 337.8 billion.

However, foreign investor flows are influenced by a myriad of global factors and are susceptible to change course anytime.

Moving on to the news from oil & gas sector. As per an article in a leading financial daily, Indian Oil, Hindustan Petroleum, Bharat Petroleum, and GAIL have exceeded their capital expenditure targets for the current fiscal, having spent heavily on refinery upgrades, pipelines, and marketing infrastructure.

The combined capex target set for all state-run oil producers, refiners and marketers for FY19 is Rs 893.4 billion, of which they have collectively spent Rs 827.1 billion, or about 93%, in the 11 months through February.

Oil and Natural Gas Corp, which typically has much higher spending budget every year than the refiners, has spent about 80% of its annual target of Rs 320 billion. Its overseas arm, ONGC Videsh, has used up about 85% of its Rs 58.9 billion target, while Oil India has spent 78% of its target of Rs 43 billion.

GAIL and refiners Indian Oil, HPCL and BPCL have surpassed their annual target in 11 months. BPCL has spent Rs 89.9 billion, or 121% of its target.

GAIL, which is investing heavily in laying a gas pipeline in eastern India, had spent Rs 50.6 billion until February, or 107% of its target for the year.

HPCL has already used up 106% of its annual outlay. Indian Oil has invested 103% of its target.

Refiners have been upgrading their facilities to produce lower-emission fuels that will help curb intense air pollution in cities. They have also been spending on setting up new pipelines, depots and retail outlets, the reports noted.

Indian oil companies have been investing heavily in finding, refining and distributing oil and gas across the country for the last many years to meet mounting demand for fuel and feedstock.

Meanwhile, economic expansion has pushed up oil demand by 3.2% during April-Feb of 2018-19. India is also hoping to increase its domestic oil output and reduce its dependence on import by making massive investments in exploration and production.

Domestic crude oil output has been declining for years. India imports about 80% of the oil and about half of the natural gas it consumes. The import bill of crude oil is estimated to expand 27% from US$88 billion in FY18 to US$112 billion in FY19.

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


L&T-Mindtree Saga, Oil Prices, and Top Stocks in Action Today
Pre-Open

On Wednesday, share markets in India witnessed most of the selling pressure during closing hours and ended marginally lower after a volatile day of trading.

The BSE Sensex closed lower by 101 points to end the day at 38,133. NTPC and Tata Motors were among the top losers.

While the broader NSE Nifty ended down by 38 points to end at 11,445.

Among BSE sectoral indices, energy stocks fell the most by 1%, followed by healthcare stocks and telecom stocks.

Top Stocks in Action Today

Lupin share price will be in focus today as the company has received approval for its Tadalafil Tablets USP, 2.5 mg, 5 mg, 10 mg, and 20 mg, from the United States Food and Drug Administration (FDA) to market a generic version of Eli Lilly and Company's Cialis Tablets.

GMR Infra share price will be in focus today as the company announced a proposed investment by Tata Group, an affiliate of GIC, Singapore's sovereign wealth fund and SSG Capital Management in its Airports Business.

A binding term sheet has been signed by GMR Infra on Wednesday, pursuant to which the investors have agreed to invest Rs 80 billion in GMR Airports.

Market participants will also track Vedanta share price.

Reportedly, the company has notified the management committee, Directorate General of Hydrocarbons and Ministry of Petroleum and Natural Gas of an oil discovery in the second exploratory well H2, located in the block KG-OSN-2009/3, Krishna-Godavari Basin, East Coast of India.

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------------------------------

From the Commodity Space...

Oil prices declined on Wednesday, reversing earlier gains, as further disruptions to Venezuela's crude exports were offset by a report that US inventories rose last week.

Venezuela's main oil export port of Jose and its four crude upgraders were unable to resume operations following a massive power blackout on Monday, the second in a month.

Crude exports from the key OPEC member have dropped sharply since Washington in January banned US refiners from buying Venezuelan oil.

Oil prices have risen more than 25% this year, supported by supply curbs by the Organization of the Petroleum Exporting Countries and other major producers, along with US sanctions on exports from Venezuela and Iran.

Corporate Battle

Mindtree share price on Wednesday, decided to drop its buyback plan. As per an article, after its previous board meeting on March 20, the Mindtree board informed it would constitute a committee of independent directors to evaluate the open offer proposal of L&T.

Here's an excerpt from the article:

  • The board has decided not to proceed with a buyback of equity shares of the company. Further, it decided to immediately constitute the Committee of Independent Directors in the interests of all stakeholders to provide their reasoned recommendation in respect of the unsolicited offer by L&T.

As per market regulator norms, a share buyback is possible only when an open offer is in place after receiving approval from 75% of the shareholders.

Meanwhile, after acquiring 20.3% from Mindtree's key shareholder V G Siddhartha, L&T on Tuesday said its open offer for Mindtree would open on May 14 at Rs 980 a share.

Reportedly, L&T will spend an additional Rs 50.3 billion in the open offer to acquire another 31% from Mindtree's shareholders to take majority control in the company.

How this offer pans out remains to be seen. Stay tuned.

Operation Mission Shakti

On Wednesday, Prime Minister Narendra Modi announced that India had demonstrated anti-satellite missile capability by shooting down a live satellite. Addressing the nation, the prime minister said India's action was not directed against any country.

As per an article in a leading financial daily, Mission Shakti, which was led by the Defence Research and Development Organization, was aimed at strengthening India's overall security.

Here's an excerpt from the article:

  • Shooting down a low earth orbit satellite is a rare achievement for the country. The satellite was orbiting at an altitude of 300 km.

    Mission Shakti operation was a difficult target to achieve and was completed successfully within three minutes of launch. This was a test operation carried out by India and was not targeted against anyone.

    India joins USA, Russia and China with the capability to hit Low Earth Orbit satellite with an A-SAT missile.

As per Tanushree Banerjee, Co-head of research at Equitymaster, India is set to ride the defence wave that countries like US and China have seen in past few decades.

She has just published a premium report with details of 3 Bullet Proof Stocks that are all set to ride India's defence boom.

If you've subscribed to her premium stock recommendation service StockSelect, click here for the report.