Modi's Victory Creates Sensex History; Ache Din Ahead?
Podcast

Throughout the week, one slogan that took over the market and country as a whole was, Ab ki baar phir Modi Sarkar.

Stock markets celebrated Modi's victory as Sensex touched 40,000 mark and Nifty touched 12,000 for the first time ever.

What does this mean for the market going forward?

Tanushree strongly believes in India's future potential. She is looking at the stocks and trends that are likely to get a major push with the Modi government returning to power.

We have got one uncertainty out of the way. The one related to elections. How do you play the market now post elections?

With the elections done, the markets will now focus more on other key macro factors and corporate earnings.

Tune in to know more...


Sensex Ends 623 Points Higher; Realty and Telecom Stocks Witness Buying
Closing

Indian share markets ended their day on a strong note today after BJP led NDA government got clear mandate in the Lok Sabha Election 2019.

Gains were largely seen in the realty sector, telecoms sector, and capital goods sector.

At the closing bell, the BSE Sensex stood higher by 623 points (up 1.6%) and the NSE Nifty closed higher by 187 points (up 1.6%).

The BSE Mid Cap index ended up by 2%, while the BSE Small Cap index ended the day up by 2.4%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood up by 0.3% and the Nikkei was trading down by 0.2%, while the Shanghai Composite was trading flat.

European markets were trading on a positive note. The FTSE 100 was up by 0.7%. The DAX was trading up by 0.9%, while the CAC 40 was up by 1%.

The rupee was trading at 69.60 to the US$ at the time of writing.

Clearly, the BJP-led NDA victory in the Lok Sabha Elections 2019 has fired up the markets.

But one should also note that near term reactions to elections aside, stock markets in the longer run have been influenced by the Indian economy and growth in corporate earnings.

Indeed, despite the Congress win in 2004 (something not factored in by the markets), the Sensex has been on a major bull run since then.

This, during years when both the UPA and the NDA have been in power.

In the Long Run, Elections Don't Influence the Stock Market

 In the Long Run, Elections Don't Influence the Stock Market

Despite governments changing hands in 2004 and 2014, the Sensex gave returns of 44% and 13% in a year respectively.

Even in 2009, when the same government retained power, Sensex was up by 18% in a year.

So, do you think there are good times ahead for Indian stock markets?

Also, what does the Modi win mean for the market going forward? And how can one play markets post elections?

Tanushree Banerjee answers these questions in one of the latest editions of The 5 Minute WrapUp. You can read the entire article here: My Top 7 Stocks to Buy as Modi Returns to Power

Meanwhile, look out for the stocks that will rise fast when the tide of the market turns up.

GIC share price was in focus today as the company reported a 19.7% fall in standalone net profit at Rs 6 billion in the last quarter of the fiscal ended March 2019. Gross premium collection for General Insurance Corporation of India during March quarter stood at Rs 80.8 billion as against Rs 85.2 billion in the year-ago period.

On a consolidated basis, the company's net profit for the year ended March 31, 2019 fell 31.2% to Rs 22.2 billion from Rs 32.3 billion in the previous year. This was seen mainly due to increase in tax provisions on account of change in law.

Investment income for the fiscal increased 18.7% to Rs 64 billion.

Commissions, however, reduced to 15.7% on net premium from 16.9% in 2017-18.

The board of the company has recommended a dividend of Rs 6.75 per equity share for the financial year 2018-19, subject to approval of the members at the ensuing 47th annual general meeting.

Apart from the above, market participants were also tracking Ashok Leyland share price, JSW Steel share price, and Bata India share price as these companies announced their March quarter (Q4FY19) results today.

You can also read our recently released Q4FY19 Results: Bajaj Auto, PI Industries, IndusInd Bank, Bosch.

In the news from commodity space, crude oil was witnessing buying interest today. Oil prices jumped more than 1% today amid OPEC supply cuts and Middle East tensions.

However, crude oil didn't fully recoup losses seen earlier in the week. These losses were seen on the back of concerns over economic slowdown and rising inventories.

Note that crude oil prices witnessed sharp correction this week amid surging US crude inventories and weak demand from refineries. The Energy Information Administration (EIA) said US crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand.

Commercial US crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels.

US crude oil production also rose by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.

Also, speaking of crude oil, within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018.

That has made the United States the world's biggest producer ahead of Russia and Saudi Arabia.

Also, crude oil prices have quietly creeped up this year.

Oil prices have jumped as much as 3.2% to their highest level since late 2018.

As you know, rising crude oil prices have a big impact on the Indian economy as it imports over 70% of its energy needs.

Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening.

Research Analyst, Richa Agarwal believes that this has the potential to bring down sentiments in the domestic markets. She further believes that, if oil prices continue their upward march in a tight global environment, a broader correction in the sentiment fueled domestic market cannot be ruled out.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.


Sensex Trades above 39,000-Mark; L&T and Bharti Airtel Top Gainers
12:30 pm

Share markets in India are presently trading on a positive note. All sectoral indices are trading in green with stocks in the realty sector, telecom sector and capital goods sector witnessing maximum buying interest.

The BSE Sensex is trading up by 343 points (up 0.9%), while the NSE Nifty is trading up by 101 points (up 0.9%). The BSE Mid Cap index is trading up by 1.1%, while the BSE Small Cap index is trading up by 1.4%.

While the Indian stock market has given a big thumbs up to the re-election of the Modi government, what does this mean for the market going forward? And how can one play markets post elections?

Tanushree Banerjee answers these questions in the latest edition of The 5 Minute WrapUp. You can read the entire article here: My Top 7 Stocks to Buy as Modi Returns to Power

Also, with Sensex touching the 40,000 mark yesterday, does Sensex 1,00,000 sound outrageous from where we are right now?

History indicates a healthy rise in Sensex post elections. In the three elections prior to this, we have seen a government come back to power, and change hands but the Sensex has moved one way i.e. upwards.

Will the Sensex Be Close to 1,00,000 By the Next Election?

 Will the Sensex Be Close to 1,00,000 By the Next Election?

Here's what Tanushree has to say about this...

  • There are bound to be bumps along the way. The move from 5,000 to 40,000 wasn't a straight one. We had a global recession, countless moments of doomsday predictions as well.

    But we got there.

    And now, with a stable government at the centre, the pace might pick up.

    I believe there are 50 irreversible trends that will the push Sensex to 1,00,000.

    And these 50 trends look set to play out soon.

    The ride might have already begun looking at the stock market's reaction to the election results.

    But it is still early days. And the time to hop on to the ride is right now!

Meanwhile, look out for the stocks that will rise fast when the tide of the market turns up.

Market participants are tracking Ashok Leyland share price, JSW Steel share price, and Bata India share price as these companies are set to announce their March quarter (Q4FY19) results today.

You can also read our recently released Q4FY19 Results: Bajaj Auto, PI Industries, IndusInd Bank, Bosch.

In the news from the power sector, KEI Industries share price is witnessing buying interest today after the company reported a strong operational performance in Q4FY19.

The power cable manufacturing company's operating profit rose 36% at Rs 1.4 billion against Rs 1 billion in the year-ago quarter. Operating margin improved 113 basis points (bps) at 10.9% due to increase in sales and better product mix.

Net sales grew 22% at Rs 12.6 billion, while net profit jumped 21% at Rs 0.6 billion. Reports state that the company has strong pending orders worth 47.1 billion and Rs 1.1 billion for extra high voltage.

Shares of the company are presently trading at their all-time high, up 10%.

To know more about the company, you can read KEI Industries' Latest Result Analysis on our website.

Moving on to the news from the aviation space, shares of Jet Airways are trading 8% lower today after reports state that Hinduja Group and Etihad Airways failed to strike a deal to buy stake in the cash-strapped airline.

The debt-laden airline's future remains uncertain as Hinduja Group and Etihad Airways fail to make headway in their negotiations for joint ownership.

As per a leading financial daily, lenders have expressed reservations to consider the unsolicited bids, as they find them lacking financial and managerial depth.

UK-based entrepreneur Jason Unsworth, Mumbai-based Darwin Platform Group, London-based AdiGro Aviation, and Russian aviation professional Oleg Evdokimov, were not shortlisted by the lenders but had submitted bids.

Meanwhile, rating agency ICRA in a report said that the grounding of Jet Airways' aircrafts has impacted the industry's capacity by around 14%, which has resulted in a 4.2% fall in domestic air traffic to 11 million in April.

Note that, Jet Airways has seen a slew of top executives and board members leave the airline in the past few months. Last month, Nasim Zaidi quit his position as non-executive and non-independent director on the airline's board citing 'personal reasons' and 'time constraints'.

The airline's independent director, Rajshree Pathy also quit the board in April. Last week, top executive Gaurang Shetty, considered close to founder Naresh Goyal, also resigned from airline's board of directors.

In other news, Singapore-based aircraft leasing company BOC Aviation said it has delivered three Boeing B737-800 NG aircraft to Indian carrier SpiceJet.

The three aircraft are powered by CFM56 engines. BOC Aviation is a leading global aircraft operating leasing company with a fleet of 507 aircraft.

SpiceJet share price is presently trading up by 6.6%.

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


Sensex Opens 349 Points Up; Capital Goods and Energy Stocks Rally
09:30 am

Asian share markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.2% while the Hang Seng is up 0.2%. The Nikkei 225 is trading down by 0.7%. US stocks slumped on Thursday as investors dumped shares of companies in growth and cyclical sectors, with energy and technology leading declines, on fears that the escalating US-China trade war would stymie global economic growth.

Back home, India share markets opened the day on a strong note after Election 2019 results gave clear mandate to the BJP led NDA government. The BSE Sensex is trading up by 349 points while the NSE Nifty is trading up by 112 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.4% and 0.3% respectively.

All sectoral indices have opened the day in green with capital goods and oil & gas stocks leading the pack of gainers.

The rupee is currently trading at 69.68 against the US$.

Speaking of elections and stock markets, it is interesting to see how the Sensex reacted in 2-3 days immediately after the election results were out over the years.

In 2004, it was expected that the BJP-led NDA combine would win, and the markets seemed to have factored that.

However, BJP's slogan then 'India Shining' and 'Feel Good Factor' failed to enthuse the people of India, and the reverse happened. The Congress-led UPA won the elections. The stock markets did not take this too well.

However, in 2009, the UPA won by a clear majority and the stock markets gave a big thumbs up. A lot was expected from the erstwhile PM Manmohan Singh at the time, and India's economy grew at a scorching pace since then.

However, it's in the second term of the UPA government that corruption, rot, and general apathy set in. The economy slowed down.

And the Modi-led NDA gained a thumping majority in 2014.

Indeed, in the run-up to the 2014 elections, the Sensex was already notching up gains, and the bull run continued for the rest of that year as well.

How the Sensex Reacted in Days Immediately After Election Results

How the Sensex Reacted in Days Immediately After Election Results

This time, the BJP clinched a roaring victory just like it did five years ago. The Sensex briefly touched the 40,000 mark, paving the way for Sensex 100,000.

In the news from the global economy. The International Monetary Fund (IMF) has warned that, the escalation of trade tension between the US and China has the potential to disrupt the global supply chains and jeopardise the projected recovery in growth in 2019.

The warning came days after President Donald Trump imposed 25% tariff on US$ 200 billion worth of Chinese imports.

The world's two largest economies are locked in a trade war since Trump imposed heavy tariffs on imported steel and aluminium items from China in March last year, a move that sparked fears of a global trade war.

In response, China imposed tit-for-tat tariffs on billions of dollars' worth of American imports.

The trade war escalated after Trump on May 10 increased the import duty on Chinese products worth US$ 200 billion from 10% to 25%.

The IMF said that consumers in the US and China are unequivocally the losers from the trade tension.

At the global level, the additional impact of the recently announced and envisaged new US-China tariffs, expected to extend to all trade between the two countries, will subtract about one-third of a percentage point of global GDP in the short term, with half stemming from business and market confidence effects, the IMF said.

Failure to resolve trade differences and further escalation in other areas, such as the auto industry which would cover several countries, could further dent business and financial market sentiment, negatively impact emerging market bond spreads and currencies, and slow investment and trade, it said.

Noting that the US-China trade tensions have negatively affected consumers as well as many producers in both the countries, the IMF said the tariffs have reduced trade between the US and China, but the bilateral trade deficit remains broadly unchanged.

The impact on US producers with significant exposure to Chinese markets was also captured in stock market valuations. For instance, the equity price performance of US companies with high sales to China underperformed relative to the US businesses exposed to other international markets, after tariffs linked to the US$ 34 billion retaliation list by China were implemented, the IMF said.

According to the IMF, the gap narrowed at the beginning of 2019 with the trade truce, but it reopened again after the US tariff increase to 25% on the US$ 200 billion.

Trump has been demanding that China reduce the massive trade deficit which last year climbed to over US$ 539 billion. He is also pressing for verifiable measures for protection of intellectual property rights (IPR), technology transfer and more access to American goods to Chinese markets.

Moving on to the news from pharma sector. As per an article in a leading financial daily, Cipla has signed an agreement to acquire 26% stake on a fully diluted basis in AMPSolar Power Systems Private limited.

The cost of acquisition is Rs 129 million and post-acquisition AMPSolar will become an associate of Cipla.

The agreement is formed for the purpose of setting up a captive solar power project in Maharashtra.

The stock will be in focus today.

Meanwhile, Cipla reported a whopping 105% increase in its consolidated net profit at Rs 3.7 billion for the quarter ending March 2019 as compared to Rs 1.8 billion in the year-ago period.

The consolidated net sales rose 22% to Rs 42.7 billion as against Rs 35 billion in March 2018.

The company's board recommended a dividend of Rs 3 per share.

The board also approved plans to raise funds up to Rs 30 billion by issue of equity raises and another Rs 30 billion may be raised by issuing non-convertible debentures or bonds.

Cipla share price opened the day up by 0.8%.

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


Modi's Return to Power, Sensex Hitting 40,000-Mark and Top Stocks in Action
Pre-Open

The Indian share markets slipped into the red with Sensex tumbling over 1,000 points from its intraday high as investors booked profits at higher levels that saw Sensex and Nifty hitting 40,000 and 12,000 levels, respectively.

The optimism came over the National Democratic Alliance (NDA's) return to power after the 2019 Lok Sabha election.

In the last hour of the day's trading session, the S&P BSE Sensex had slipped almost 300 points to trade around 38,810 levels, with Vedanta, ITC, HDFC Bank, Tata Motors, and Bajaj Finance dragging the indices down. The Nifty50 index was hovering around 11,650 levels, down 81 points.

While the Indian stock market has given a big thumbs up to the re-election of the Modi government, what does this mean for the market going forward? And how can one play markets post elections?

Tanushree Banerjee answers these questions in the latest edition of The 5 Minute WrapUp. You can read the entire article here: My Top 7 Stocks to Buy as Modi Returns to Power

Also, with Sensex touching the 40,000 mark, does Sensex 1,00,000 sound outrageous from where we are right now?

History indicates a healthy rise in Sensex post elections. In the three elections prior to this, we have seen a government come back to power, and change hands but the Sensex has moved one way i.e. upwards.

Top Stocks in Focus

Thermax share price will be in focus as it reported a rise of 31.5% in its net profit at Rs 1.1 billion for the quarter ended March 2019 as compared to Rs 0.9 billion for the same quarter in the previous year.

Zydus Cadila has received the final approval from the United States Food & Drug Administration (USFDA) to market Esomeprazole Magnesium Delayed-Release Capsules USP (US RLD- NEXIUM), 25 mg and 40 mg. Cadila Healthcare will be watched out today.

NMDC reported 2.9 million tonne (MT) of iron ore production and logged sales volume of 2.7 MT up to the month of April 2019.

Ramco Cements reported a rise of 52.3% in its net profit at Rs 1.7 billion for the fourth quarter ended March 2019 as compared to Rs 1.1 billion for the same quarter in the previous year.

Sintex Industries has received an approval for the disinvestment in BVM Overseas up to 24.99% for the purpose of raising resources for long term working capital requirement and accordingly BVM Overseas will cease to be a Wholly Owned Subsidiary Company and will remain a Subsidiary of the Company.

Reliance Capital has signed binding definitive agreements with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management. Both partners currently hold 42.9% each in the company, while the rest is with public shareholders.

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

Results Corner

Market participants will track Ashok Leyland, Bata India, Birlasoft, Dishtv, IDFC, JSw Steel, Rolta India, Whirlpool among others as they announce their March quarter results today.

Domestic Air Passenger Volume falls in April

The domestic air passenger count fell 4.5% in the month of April 2019.

According to the DGCA data, domestic airlines flew 110 lakh passengers in April 2019, as against 115.1 lakh passengers carried in the same month of last year.

However, passengers carried by domestic airlines during January-April 2019 were 464.5 lakh as against 453 lakhs during the corresponding period of previous year, registering a growth of 2.5%.

In terms of passenger load factor (PLF), SpiceJet was leading among all with 93.7% PLF during the month of April 2019, followed by Go Air (90.8%), IndiGo (87.8%), Vistara (84.6%) and Air Asia (84.4%).

The passenger load factor in the month of April 2019 has shown decreasing trend compared to previous month due to end of vacation period of various sectors.

Global Stock Market Drivers

US equity futures and European stocks tracked a slide in Asian shares on Thursday as trade tensions between the world's two largest economies showed little sign of easing. Treasuries climbed with the dollar.

The pound extended its decline against the euro to a record 14th day amid a growing revolt over Brexit that looks increasingly likely to force Theresa May from power. The common currency dipped against the dollar as measures of German business confidence and euro-area output missed expectations, and as voting got underway in European elections.

Here are some notable events to look forward to:

  • The European Parliament holds continent-wide elections May 23-26.
  • The European Central Bank publishes its account of the April monetary policy decision.

Oil Prices Fall

Oil prices dropped by around 1% on Thursday, extending falls from the previous session amid surging US crude inventories and weak demand from refineries.

Brent crude futures, the international benchmark for oil prices, were at US$70.36 per barrel, down 0.9% from their last close.

US West Texas Intermediate (WTI) crude futures were down by 51 cents, or 0.8%, at US$60.91 per barrel.

Crude futures already fell by around 2% the previous day.

US crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.

Commercial US crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.

Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of US strategic petroleum reserves (SPR) into the commercial market.

US crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.