Sensex Tanks 886 Points; IT, Energy and Finance Stocks Witness Selling
Closing

Indian share markets witnessed heavy selling pressure today even after Finance Minister Nirmala Sitharaman on Wednesday announced a set of stimulus measures to support micro small and medium enterprises (MSMEs), non-banking financial companies (NBFCs), and power distribution companies.

Optimism over the economic package was offset by the selloff in global markets.

Asian equities slipped today following another selloff on Wall Street as US Federal Reserve chief Jerome Powell warned of a "highly uncertain" outlook for the economy, adding that lawmakers might have to provide even more stimulus on top of the US$ 3 trillion already declared.

Further, World Health Organization's warning saying that the virus "may never go away" dampened investor sentiments.

FM Nirmala Sitharaman will address the media today in the second phase of announcements on government's Rs 20 trillion package.

Sectoral indices ended on a mixed note, with stocks in the IT sector, energy sector and finance sector witnessing selling pressure, while healthcare stocks and FMCG stocks ended in green.

At the closing bell, the BSE Sensex stood lower by 886 points (down 2.8%) and the NSE Nifty closed down by 241 points (down 2.6%).

The SGX Nifty witnessed huge selling pressure and was trading at 9,118, down by 281 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended the day down by 0.4% and 0.6%, respectively.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down 1.4% and the Shanghai Composite stood lower by 1%. The Nikkei was down 1.7%.

The rupee was trading at 75.56 against the US$.

{inlineads1}

Note that the coronavirus impact has shaken markets worldwide. Businesses are seeing unprecedented shifts in a virus struck, locked down economy.

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, there are robust smallcap businesses that are not just resilient but likely to emerge stronger from this crisis.

Richa has shared her views on these smallcaps, in the video below. Tune in now...

Moving on, market participants were tracking Biocon share priceEscorts share price, and Indiabulls Real Estate share price as these companies announced their March quarter results (Q4FY20) today.

In news from the commodities space, domestic gold prices traded higher on the Multi Commodity Exchange (MCX) today as worries over second phase of virus infections dampened risk appetite amid mixed fundamentals.

Weaker economic data and persisting US-China tensions also supported the yellow metal's prices.

Gold June futures rose as much as 0.5% to Rs 46,220 per 10 grams, extending their 0.8% gains of the previous session.

Tracking gold, silver futures on MCX rose 0.5% to Rs 43,207 per kg.

In global markets, gold prices eased today after US Federal Reserve Chairman Jerome Powell downplayed the possibility of negative interest rates.

Powell said that the US economy faces unprecedented downside risks that could do lasting damage to households and businesses if fiscal and monetary policymakers don't rise to the challenge.

US stocks fell sharply for the second day on Wednesday, after his comment. The Dow Jones Industrial Average slipped 2.2% and the S&P 500 fell 1.8%.

Spot gold eased 0.2% to US$ 1,712.58 per ounce, having jumped 0.8% in the previous session.

Jerome Powell on Wednesday warned of a "significantly worse" US recession than any downturn since World War II and said that the US central bank will take more actions if needed.

The Fed chair in his speech outlined the worrying scenario posed by mass bankruptcies and unemployment.

Meanwhile, the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.8% to 1,092.14 tonnes on Wednesday.

Speaking of gold, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

  • "In fact, gold has delivered double-digit gains in 10 of the last 15 years.

    During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).

    During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.

    One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment."

Meanwhile, Apurva Sheth, lead chartist at Equitymaster, talks about a reliable investing signal, which is indicating that gold prices will go higher.

Tune in to his video here...

Moving on to news from the FMCG sector, shares of Godrej Consumer Products gained over 6% today, even as the company's consolidated net profit for the quarter ended March 2020 declined 75.4% year-on-year (YoY) to Rs 2.3 billion.

The company had logged a profit of Rs 9.4 billion in the year-ago period.

The company's revenue declined 12.2% to Rs 21.5 billion against Rs 24.3 billion reported in the corresponding quarter of the previous fiscal.

Total income for the quarter under review came in at Rs 22,029.6 million, down 11.2% against Rs 24,817.2 million in the year-ago period.

For the full year, the company's net profit declined 36.1% to Rs 15 billion as against Rs 23.4 billion during the previous year ended March 2019.

Sales declined 3.9% to Rs 98.3 billion as against Rs 102.2 billion in the previous year.

The company noted that its sales have been affected adversely due to Covid-19 lockdown in India as well as overseas locations.

Godrej Consumer Products share price ended the day up by 5.4%.

To know more, you can read Godrej Consumer's Q4FY20 result analysis on our website.

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


Indian Indices Extend Losses; Infosys, IndusInd Bank & Tech Mahindra Fall 4%
12:30 pm

Share markets in India have extended early losses and are presently trading deep in the red.

Benchmark indices edged lower today as optimism over the economic package announced by the government yesterday was offset by the selloff in global markets.

Asian equities slipped today following another selloff on Wall Street as US Federal Reserve chief Jerome Powell warned of a "highly uncertain" outlook for the economy, adding that lawmakers might have to provide even more stimulus on top of the US$ 3 trillion already declared.

Further, World Health Organization's warning saying that the virus "may never go away" dampened investor sentiments.

Barring FMCG sector, all sectoral indices are trading on a negative note with stocks in the IT sector and banking sector witnessing most of the selling pressure.

{inlineads1}

The BSE Sensex is trading down by 651 points while the NSE Nifty is trading down by 172 points.

The BSE Mid Cap index is trading on a flat note, while the BSE Small Cap index is trading down by 0.3%.

The rupee is trading at 75.43 against the US$.

Gold prices are currently trading up by 0.4% at Rs 46,154.

Note that the coronavirus impact has shaken markets worldwide. For the BSE Sensex, FY20 was the second worst year post FY08, the year of the global financial crisis.

Good Time to Start Investing Now?

Naturally, there is an atmosphere of fear all round.

Is it time to sell stocks now? Will the correction get worse?

History has shown that after years like the one we had just now, the next 3 years are good for the markets. In fact, these corrections are the rare times when you find businesses with solid fundamentals at reasonable valuations.

If you can find good businesses that can survive the current crisis, you will do well in the long run.

Meanwhile, in the video below, Richa Agarwal, editor of our premium smallcap service Hidden Treasure, talks about robust smallcap businesses that are not just resilient but likely to emerge stronger from the coronavirus crisis.

Tune in now...

Moving on, market participants are tracking Biocon share price, Escorts share price, and Indiabulls Real Estate share price as these companies are scheduled to announce their March quarter results (Q4FY20) later today.

In news from the power sector, shares of electric utilities and power finance companies are in focus today.

Shares of Adani Power, Torrent Power, Indian Energy Exchange and CESC are trading up in the range of 3-5%.

{inlineads2}

On Wednesday, Finance Minister Nirmala Sitharaman announced a special liquidity infusion scheme for the power distribution sector, through which it is looking to infuse around Rs 900 billion in the distribution companies (DISCOMs).

FM Nirmala Sitharaman said Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse liquidity in the DISCOMs to the extent of Rs 900 billion in two equal instalments. This amount will be used to pay their dues to transmission and generation firms.

Reportedly, the dues of DISCOMs to power generation and transmission firms are to the tune of Rs 940 billion.

The government also noted that the disbursement of loans would be against state guarantees. In addition, the disbursal would be related to specific measures such as DISCOMs providing facility for digital payments, liquidation of state government dues to DISCOMs, and reduction in financial and operational losses of DISCOMs.

FM Nirmala Sitharaman will address the media today at 4 PM in the second phase of announcements on government's Rs 20 trillion package.

What effects this liquidity infusion has on the power sector and DISCOMs remains to be seen. Stay tuned for more updates from this space.

Moving on to news from the pharma sector, Ipca Labs share price and Torrent Pharma share price are witnessing buying interest today.

Morgan Stanley Capital International said it will add six stocks in its MSCI India Index, and remove five scrips from the same.

The six stocks include Abbott India, Ipca Laboratories, Jubilant Foodworks, Power Finance Corporation, Tata Consumer Products and Torrent Pharma.

On the other hand, Ashok Leyland, Bank of Baroda, Cummins India, Mahindra & Mahindra Financial Services and Tata Power Company will be removed from the index.

In other news, shares of Syngene International gained 5% intraday today after the company reported a 24% year on year (YoY) growth in EBITDA (earnings before interest, taxes, depreciation and amortization) at Rs 2.3 billion in Q4FY20.

EBITDA margin, too, expanded by 300 basis points to 36% from 33% in year ago quarter.

The company posted quarterly revenue of Rs 6.3 billion, a jump of 13% YoY from the corresponding quarter last year, when it had posted a revenue of Rs 5.6 billion.

The company's profit after tax rose 20% to Rs 1.2 billion as against last year's profit of Rs 1 billion.

Reportedly, Q4FY20's performance was driven by strong growth in its discovery and development services divisions. During the quarter, the company commissioned a new research facility at Biocon Park in Bengaluru.

The company further said it has successfully cleared a USFDA inspection of its small molecule bioanalytical laboratory within the clinical development unit with no observations or formal discussion points.

Syngene International share price is presently trading up by 2.2%.

Speaking of the pharma sector, in December 2019, co-head of Research at Equitymaster, Tanushree Banerjee had predicted that pharma could be the sector to see a big rebound in 2020.

And rightly so, most pharma companies have re-emerged as the safer bets for investors in the ongoing market turmoil. Last month, the Indian rupee touched a new record low of Rs 76.92 against the US dollar. Most pharma companies generate their revenues through exports. Hence, a depreciating rupee is a positive development for them.

As per Tanushree, in a post Covid-19 world, healthcare expenditures globally will see a big rejig.

Tanushree has her eyes on an exciting tech stock. The company in question is developing its medical division. It's focusing on telemedicine, which Tanushree believes will be a huge growth driver in a post Corona world.

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


Sensex Opens Over 500 Points Down; IT and Automobiles Stocks Under Pressure
09:30 am

Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.7% while the Hang Seng is down 1.3%. The Nikkei 225 is trading down by 0.6%. Wall Street's three major indices closed lower for the second day in a row after Federal Reserve Chairman Jerome Powell warned on Wednesday of extended economic weakness due to the coronavirus pandemic and called for Congress to agree on additional fiscal support.

Trends on SGX Nifty indicated a negative opening for the index in India with a 145 points loss.

India share markets fell in the opening session. The BSE Sensex is trading down by 547 points while the NSE Nifty is trading down by 152 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.6% and 0.4% respectively.

Except realty stocks, all sectoral indices are trading in red with IT stocks, automobiles stocks and banking stocks witnessing maximum selling pressure.

Moving on, gold prices are currently trading up 0.8% at Rs 45,981.

The rupee is currently trading at 75.43 against the US$.

{inlineads1}

The rupee appreciated by 5 paise to 75.46 against the US dollar on Wednesday as fiscal stimulus by the government bolstered investor sentiment.

Prime Minister Narendra Modi's Rs 20 trillion economic stimulus package enthused investors.

However, risk sentiments are negative and investor sentiments remain fragile over coronavirus concerns.

At the interbank foreign exchange, the rupee opened on a strong note at 75.31 but lost most of its gains in day trade.

The local currency settled at 75.46 against the US dollar, registering a rise of 5 paise over its previous close. During the trading session rupee witnessed an intra-day high of 75.30 and a low of 75.50.

In a recent article titled: The Sharp Fall in Indian Rupee: 6 Points to Know, we dive deeper and look at the factors behind rupee's depreciation.

We also reached out to Vijay Bhambwani, editor of Weekly Cash Alerts, who is closely tracking the Indian rupee in the current scenario. Here's what he has to say...

  • The onset of Corona virus has not been kind to the INR.

    The Rupee futures (USDINR) opened in March at 72.36 and have closed at 76.61 on April 09 2020. That is a decline of 5.87% in 6 short weeks.

    The implications of the same will be widespread. India is a net importing Country. Everything that we import will now be more expensive. Approximately two thirds of all our imports are fossil fuels. Fuels are what we call multiplier effect commodities. If fuel prices rise at the petrol pumps, everything from fruits, vegetables, grains to dairy and poultry products get expensive.

    That impact will be felt at a later date. I expect the trickle down effect to start appearing in prices after the April-June quarter is over.

    I have already factored in this aspect in my statistical data model and plan to identify such events to generate profitable trading opportunities for my WCA plan subscribers.
{inlineads2}

Moving on to the news from the financial sector. Finance Minister Nirmala Sitharaman on May 13 announced a Rs 300-billion special liquidity scheme for non-banking finance companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs).

She also announced an extension of the partial credit guarantee scheme worth Rs 450 billion under which the first 20% loss in debt papers will be borne by the government.

AA and below rated and unrated papers will be eligible for this investment.

FM Sitharaman detailed the Rs 20 trillion economic stimulus package under the Atmanirbhar Bharat Abhiyan.

The first tranche of the announcement has 15 relief measures, of which six pertain to the micro, small and medium enterprises (MSMEs), two related to Employees' Provident Fund, two on non-banking finance companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs), one on discoms, one for contractors, one for real estate and 3 tax measures.

We will keep you updated on the reform measures announced in coming days for various sectors. Stay tuned.

Note that in March, Finance Minister Nirmala Sitharaman had announced a package of Rs 1.7 trillion.

Unlike the previous stimulus packages, this one is no longer a tiny fraction of India's GDP.

At about 10.2%, it is among the biggest stimulus packages announced over the past few months by governments all around the world. This is evident in the chart below:

India's Rs 2 Trillion Stimulus Package One Among the Largest in the World

We will keep you updated on the latest developments from this space. Stay tuned.

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


Inside Modi's Mega Stimulus Package, Vedanta's Delisting Plan, SGX Nifty Surges, and Top Cues in Focus Today
Pre-Open

Indian share markets ended on a strong note yesterday.

Indian stock markets staged a gap up opening yesterday as investors were optimistic over the announcement of Rs 20 lakh crore economic relief package announced by Prime Minister Narendra Modi.

At the closing bell yesterday, the BSE Sensex stood higher by 637 points (up 2%) and the NSE Nifty closed higher by 187 points (up 2%).

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.5% and 2%, respectively.

On the sectoral front, gains were largely seen in the capital goods sector, banking sector and realty sector.

After surging more than 450 points, SGX Nifty gave up some gains and was trading at 9,387, up by 211 points, at the time of Indian stock market closing hours yesterday.

SGX NIFTY is a derivative of NIFTY index traded officially in Singapore stock exchange.

How it performs this week and affects trades in Indian markets remains to be seen.

We will keep you updated about its movement in upcoming market commentaries. Stay tuned.

{inlineads1}

Speaking of stock markets, in the recent episode of Investor Hour Rahul Goel talks to Vijay Bhambwani, who he calls India's #1 trader.

Vijay believes there's money to be made in the market... across asset classes.

He talks about about stocks, bonds, the rupee, gold, silver, crude oil, and pretty much everything of interest to both traders and investors.

Tune in to find out more...

Also, note that the coronavirus impact has shaken markets worldwide. Businesses are seeing unprecedented shifts in a virus struck, locked down economy.

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, there are robust smallcap businesses that are not just resilient but likely to emerge stronger from this crisis.

Richa has shared her views on these smallcaps, in the video below. Tune in now...

Top Stocks in Focus Today

Market participants will be tracking Maruti Suzuki share priceKotak Mahindra Bank share price and Siemens share price as these companies announced their March quarter results (Q4FY20).

Kotak Mahindra Bank reported standalone profit of Rs 12.7 billion for the quarter under review, registering a 10% fall due to a significant jump in COVID-19 related provisions.

Meanwhile, Maruti Suzuki posted 28% year-on-year (YoY) drop in standalone net profit at Rs 12.9 billion for Q4FY20. It had reported a net profit of Rs 17.9 billion in the same period last year.

Shares of cement manufacturers will also be in focus today as Prime Minister Narendra Modi announced a Rs 20 trillion stimulus package. Market participants will be tracking shares of Ambuja Cements, UltraTech Cement, ACC, Orient Cement, JK Cement and Ramco Cements.

{inlineads2}

Modi's Rs 20 Trillion Stimulus Package

Prime Minister Narendra Modi on Tuesday evening announced a much-awaited Rs 20 trillion stimulus package.

Modi said the Rs 20-trillion package, nearly 10% of India's gross domestic product (GDP), would be with the objective of putting money into people's pockets to spur domestic consumption and demand.

The package would cater to various sections, including the cottage industry, micro, small and medium enterprises (MSMEs), laborers, and middle class.

The package includes the government's recent announcements on supporting key sectors, as also measures rolled out by the Reserve Bank of India (RBI).

Finance Minister Nirmala Sitharaman unveiled the details of this economic package yesterday.

Here are the top highlights on what's inside the Modi's Rs 20 trillion stimulus package:

  • Finance Minister Nirmala Sitharaman rolled out the Rs 20 trillion stimulus package, labelled 'Atmanirbhar Bharat Abhiyan', aimed at spurring growth and building a self-reliant India.
  • FM announced six measures for micro, small and medium enterprises (MSMEs), two measures related to employees provident fund (EPF), two related to housing finance coompany (HFCs) and micro finance institutions (MFIs), one for discoms, one for real estate, in addition to three other tax measures.
  • The FM said collateral free loans will be offered to MSMEs. The loans worth Rs 3 lakh crore will be given to MSMEs. These loans will have 4-year tenure and a total of 45 lakh MSME units will benefit from the same.
  • For the first 12 months, there will be no principal repayment for this loan.
  • Banks and NBFCs offering such loans would be given 100% cover on principal and interest payments. Stressed MSMEs loan provisions have been kept at Rs 200 billion. Over 2 lakh units are seen benefitting from the measure.
  • FM said the government has already refunded Rs 180 billion to tax payers. A total of 14 lakh taxpayers have benefitted from clearing of refund dues.
  • EPF relief for all establishments with Rs 25 billion liquidity support. There will be extending support for another three months from March-May 2020 to June-August 2020 as well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will benefit from this.
  • To increase take-home salaries for those not covered in EPF benefit, the statutory PF contribution is being reduced from 12% to 10%.
  • For NBFCs, HFCs and MFIs the FM said that it was felt NBFCs were not getting resources. The government is launching Rs 300 billion special liquidity scheme where government will buy investment grade debt papers of NBFCs, HFCs and MFIs. These securities will be fully guaranteed by GoI.
  • The economic package will cater to MSMEs, labourers, middle-class industry. It will also cater to cottage industry.
  • MoS Finance Anurag Thakur, who accompained Sitharaman, said the team will come everyday to announce some reform measures for different sectors, as mandated by the Prime Minister.

These were some of the key highlights form the FM's speech yesterday. We will keep you updated on the reform measures announced in coming days for various sectors. Stay tuned.

Note that in March, Finance Minister Nirmala Sitharaman had announced a package of Rs 1.7 trillion.

Unlike the previous stimulus packages, this one is no longer a tiny fraction of India's GDP.

At about 10.2%, it is among the biggest stimulus packages announced over the past few months by governments all around the world. This is evident in the chart below:

We will keep you updated on the latest developments from this space. Stay tuned.

Vedanta Announces Plans to Delist

Vedanta announced its plans to delist by buying out shares held by public.

In a regulatory filing, Vedanta said that its promoter group Vedanta Resources has "expressed its intention to, either individually or along with one or more subsidiaries, acquire all fully paid-up equity shares of the company that are held by the public shareholders of the company".

The board of directors of the company are scheduled to meet on Monday, May 18, 2020 to consider the proposal for voluntary delisting of the equity shares of the company.

Billionaire Anil Agarwal controlled Vedanta Resources will offer Rs 87.5 per share to nearly 49% public shareholders of Vedanta.

Vedanta Resources, along with the other members of the promoter group, presently holds 51.06% equity of the company.

The company said that delisting of Vedanta is the next logical step in this simplification process and will provide the group with enhanced operational and financial flexibility in a capital-intensive business.

The company further said the proposed delisting offer will provide public shareholders of Vedanta an opportunity to realize immediate and certain value for their shares at a time of elevated market volatility.

As of September, Vedanta had an outstanding net debt of US$ 6.6 billion. The company has debt maturities of US$ 1.9 billion till September 2021 and an annual interest payment of US$ 400 million.

Retail Inflation Eases to 5.84%

According to data released by the Ministry of Statistics and Programme Implementation, retail inflation, calculated on the basis on Consumer Price Index (CPI), was revised to 5.84% in March.

Data released by the National Statistical Office (NSO) showed that retail inflation remained in the RBI's upper target limit of 6% for the first time since November 2019.

This was the lowest level of retail inflation reported since November last year.

The ministry said it was not releasing general CPI for April in view of the nationwide lockdown to contain spread of COVID-19 pandemic.

Generally, the price data for calculation of CPI are collected from selected 1,114 urban markets and selected 1,181 villages. However, due to the coronavirus-led lockdown, the price collection of CPI through personal visits of price collectors was suspended with effect from 19 March 2020.

In the month of April 2020, price data was largely collected by telephonic enquiry from the designated outlets.

Meanwhile, India's industrial output as measured by IIP (Index of Industrial Production), steeply contracted by 16.7% in the month of March 2020 as compared to the year-ago period.

This was mainly due to slump in production from mining, manufacturing and electricity sector amid nationwide lockdown.

How the above indicators of the economic activity look in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

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