Nifty Scales New Record High; Auto and Energy Stocks Witness Buying
Closing

Indian share markets continued their momentum and ended their day on a strong note today. The benchmark indices ended their session at record-highs as the three-day Monetary Policy Committee meeting kicked off.

Gains were largely seen in the auto sector, energy sector, and consumer durables sector.

At the closing bell, the BSE Sensex stood higher by 553 points (up 1.4%) and the NSE Nifty closed higher by 165 points (up 1.4%).

The BSE Mid Cap index ended up by 0.9%, while the BSE Small Cap index ended the day up by 0.5%.

Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng stood down by 0.03% and the Nikkei was trading down by 0.9%, while the Shanghai Composite was trading down by 0.3%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.2%. The DAX was trading down by 0.04%, while the CAC 40 was down by 0.07%.

--- Advertisement ---
Acche Din Are Here Again…Sensex 100,000 To Follow

Modi's win has already caused the Sensex to soar significantly in celebration.

And we have no doubt that we could be looking at Sensex 100,000 in the years to come.

Early investors have the potential to get immensely rich…as long as they can identify the right opportunities.

Here's how we identify the best stocks to profit from.

Click here for full details on the 4 stocks that stand to benefit in the years to come…and lead to huge potential profits for investors.
------------------------------

The rupee was trading at 69.29 to the US$ at the time of writing.

In the news from macroeconomic space, in the first meeting of cabinet ministers, the Modi 2.0 government approved a proposal to extend the benefit of Rs 6,000 per year under the PM-KISAN scheme to all farmers in the country.

The scheme is extended to all the 14.5 crore farmers in the country costing Rs 870 billion a year.

The Cabinet also announced over Rs 100 billion pension scheme for 5 crore farmers, thereby fulfilling the BJP's poll promise. Under this scheme, small and marginal farmers will get a minimum fixed pension of Rs 3,000 per month on attaining the age of 60 years.

The above decisions were taken in the first cabinet meeting of the new NDA government. In its manifesto for 2019 general elections, the BJP had promised to extend the scheme to all farmers.

Speaking of Modi 2.0, the newly elected government is also likely to focus on infrastructure spending.

This we say is because if there's one area that needs immediate attention by the government, it is job creation.

According to a CMIE survey, the unemployment number stands at 41 million people. That is too big a number to be ignored.

Now, job creation at such a mass level won't be a walk in the park. To set the wheels in motion, the government will have to look at infrastructure spending.

And as we can see in the chart below, capacity expansion in new projects has seen a gradual slowdown recently.

Infra Capacity Expansion Likely to Be the Key Focus of the Modi Government

Infra Capacity Expansion Likely to Be the Key Focus of the Modi Government

Here's what Tanushree Banerjee wrote about it in one of the recent editions of The 5 Minute WrapUp...

  • From Rs 3.3 trillion in June 2018, the number has come down sharply to Rs 2.1 trillion as of March 2019. I believe this will the first area the government will look to focus on. Apart from creating jobs in the infrastructure sector, it opens a lot of other avenues.

    Better infrastructure will mean better connectivity to non-metros. This will attract manufacturing companies to set shop in these towns. It will give a boost to the urbanisation of the population.

    This is a trend I see clearly playing out in the coming years.

    Infrastructure spending -> Improved roads -> Increased two-wheeler sales.

This is just one of the 50 irreversible trends Tanushree believes will carry the Sensex to 1,00,000.

In the news from the commodity space, Saudi Aramco has raised its July price for its Arab Light grade oil for Asian customers by US$ 0.60 a barrel from June.

The price now stands at a premium of US$ 2.70 per barrel to the Oman/Dubai average.

In other news, crude oil was witnessing selling pressure today after the Trump administration said it was ready to talk with Iran about its nuclear programme without any preconditions.

The statement followed President Trump's comment last week that he was ready to talk to Iranian leaders and was not seeking regime change, overruling a longtime goal of his national security adviser.

The statement also recalibrated that the United States would not lift sanctions on Iran unless it complied with a dozen sweeping demands.

Tracking the above news, Brent crude futures tumbled 1.5% to US$ 61.06 a barrel.

Speaking of crude oil, Vijay Bhambwani, editor of Weekly Cash Alerts, called the US President Donald Trump's bluff on crude oil in one of his recent articles. Here's an excerpt of what he wrote...

  • From 2018 US is the largest oil producing country in the world with 13.4% of the global oil output daily.

    The USA has jumped ahead of Saudi Arabia and Russia in oil output. My question to every oil trader out there is this - as long as the USA was an importer, it made sense to push for lower oil prices. There were tangible benefits in doing so.

    President Donald Trump runs the world's largest debtor nation. One that is gasping for export income and a strong dollar. A firm USD ensures easier servicing and repayment of debt and vice versa. So now that Trump wants to export oil, and earn petro dollars does it benefit him if oil prices were to go up or down? So why does he tweet for lower oil prices?

To know more, you can read Vijay's entire article here: Crude Oil - What 'Trump Nation' Really Wants

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


Indian Indices Extend Gains; Hero MotoCorp & Bajaj Auto 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 automobile sector, metal sector and IT sector witnessing maximum buying interest.

The BSE Sensex is trading up by 335 points (up 0.8%), while the NSE Nifty is trading up by 99 points (up 0.8%). The BSE Mid Cap index is trading up by 0.8% and the BSE Small Cap index is trading up by 0.4%.

The rupee is trading at Rs 69.46 against the US$.


Snapping a three-day losing streak, the rupee had settled at 69.70 against the US dollar on Friday, 17 paise higher compared to the previous close.

--- Advertisement ---
Acche Din Are Here Again…Sensex 100,000 To Follow

Modi's win has already caused the Sensex to soar significantly in celebration.

And we have no doubt that we could be looking at Sensex 100,000 in the years to come.

Early investors have the potential to get immensely rich…as long as they can identify the right opportunities.

Here's how we identify the best stocks to profit from.

Click here for full details on the 4 stocks that stand to benefit in the years to come…and lead to huge potential profits for investors.
------------------------------

As per an article in The Economic Times, rupee could be set to gain as Prime Minister Narendra Modi's sweeping election victory boosts foreign inflows.

Here's an excerpt from the article:

  • The rupee is emerging as Asia's top performer in the past three months, thanks to the gush of foreign cash. With inflows poised to accelerate after the election result, the Reserve Bank of India may have to rein in the currency or risk making the nation's exports less competitive as rival currencies weaken.

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 traders 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?

In the news from the aviation space, SpiceJet share price and InterGlobe Aviation (Indigo) share price are witnessing buying interest today after Indian Oil Corporation slashed Aviation Turbine Fuel (ATF) prices.

Shares of SpiceJet hit an all-time high of Rs 157 on back of the above news. Indigo also gained 2%.

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

Meanwhile, former partners and rivals of Jet Airways are launching replacement routes and looking for new codeshare partners.

In Jet's absence, Air India is the only Indian carrier that operates widebody jets capable of non-stop flights to Europe and the US, although the Vistara joint venture owned by Tata Sons and Singapore Airlines has 6 Boeing Co 787s on order due for delivery from next year.

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.

Reports also state that, SpiceJet is planning to hire up to 2,000 staff, including pilots and cabin crew, of Jet Airways as the carrier continues to expand its operations. It has taken at least 22 planes that were earlier used by Jet Airways, which temporarily shuttered its operations due to a cash crunch in April.

Jet Airways share price is presently trading down by 1.4%.

Moving on to the news from the auto sector, Hero MotoCorp share price is in focus today. Shares of the company gained around 4% in early trade today after the company reported a 13.5% rise in sales to 652,028 units in May over the previous month. The company had sold 574,366 units in April 2019.

On a year-on-year (YoY) basis, the sales for the month declined by 7.7% from 706,365 units in May 2018.

The country's largest two-wheeler maker said it had surpassed the six lakh units-mark in monthly sales for the first time since February 2019 when it had sold 617,215 units of motorcycles and scooters.

Last month, the company had launched three new motorcycles - XPulse 200, XPulse 200T and Xtreme 200S. Apart from these, it had also launched two scooters - Maestro Edge 125 and Pleasure+ 110.

Speaking of automobile stocks, 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.

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

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


Sensex Opens Higher; FMCG and Energy Stocks Gain
09:30 am

Asian share markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.5% while the Hang Seng is down 0.4%. The Nikkei 225 is trading down by 1.2%. US stocks dropped on Friday, as the S&P 500 closed out the month with its biggest May slump since 2010, after President Donald Trump's surprise threat of tariffs on Mexico fueled fears that a trade war on multiple fronts could lead to a recession.

Back home, India share markets opened higher. The BSE Sensex is trading up by 142 points while the NSE Nifty is trading up by 25 points. Both, the BSE Mid Cap index and BSE Small Cap index opened on a flat note.

Sectoral indices have opened the day on a mixed note with FMCG and oil & gas stocks leading the gainers. IT stocks and automobiles stocks have opened the day in red.

The rupee is currently trading at 69.55 against the US$.

Speaking of Indian benchmark indices, note that overall, the Sensex PE ratio has been in expansion mode over the last five years.

--- Advertisement ---
Acche Din Are Here Again…Sensex 100,000 To Follow

Modi's win has already caused the Sensex to soar significantly in celebration.

And we have no doubt that we could be looking at Sensex 100,000 in the years to come.

Early investors have the potential to get immensely rich…as long as they can identify the right opportunities.

Here's how we identify the best stocks to profit from.

Click here for full details on the 4 stocks that stand to benefit in the years to come…and lead to huge potential profits for investors.
------------------------------

Between the election results of 2014 and 2019, the Sensex PE expanded by 52%.

The chart below shows the change in the Sensex price to earnings (PE) multiple over the last five years of Modi government.

Sensex Rally Driven by PE Expansion in Modi's First Term

Sensex Rally Driven by PE Expansion in Modi's First Term

What this means is that most of the gains in Modi's first term have come mostly from an expansion of valuation multiples and only partially due to earnings growth.

What are the implications for investors in Modi's second term?

Ankit Shah answers this question in one of the latest edition of The 5 Minute WrapUp. Here's an excerpt of what he wrote...

  • In my view, what worked in Modi's first term may not necessarily work in the second one. Back in 2014, you could have put your finger on a random set of stocks, and there were good chances you would make money.

    But right now, the circumstances are quite different. The overall markets are trading at elevated valuation multiples. The economy has been showing signs of fatigue. The financial sector is still in a mess. Unemployment levels are high.

    For much of Modi's first term, the global markets were in a bull run. However, global economic conditions are not as favourable now. There are growing fears of an impending global slowdown. There has been an escalation in the US-China trade war.

    Given all these factors, do not expect the markets to have a broad-based bull run in Modi's second term.

With the elections done, the markets will now move based on earnings visibility, economic policies, global sentiments, and so on.

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

In the news from the economy. India's gross domestic product (GDP) grew 5.8% in January-March, confirming fears of a slowdown, as the new government assumed office amid expectations of a wide-ranging policy impetus to turnaround the economy that is nursing multiple pain points.

"Real" or inflation-adjusted GDP grew 6.8% in FY19, lower than previous year's 7.2%, data released by the Central Statistics Office (CSO) showed.

The growth in GDP was slowest since FY15.

Slowdown signs have been visible since last year, with GDP growing 6.6% in October-December 2018.

The national income data have reinforced deceleration signs that were emanating from a slew of shop-end data, such as car and consumer goods sales, often seen as proxy indicators to gauge trends in household spending.

Fourth quarter corporate results have also shown a slowdown in profit growth across sectors. People are buying fewer cars and domestic sales, production and export of automobiles reflected this deceleration.

Similarly, growth in fast moving consumer goods (FMCG) have also slowed down considerably in recent quarters, mirrored in slowing sales of consumer staples, such as biscuits, soaps, oil.

One of the first tasks of the new government will be to usher in policies to boost people's spending, buoy demand. This, in turn, will prompt companies to investment more, add capacities to meet growing demand, and eventually, hire more people.

The new government will present its first central budget in the first fortnight of July 2019, amid heightened expectations that it will offer tax breaks to individuals and households, giving them more money to spend and save.

National income data showed that gross value added (GVA), which is GDP minus taxes, grew 5.7% in January-March 2019. It was 7.9% in the same quarter last year and 6.3% in October-December 2018.

GVA during FY19 grew 6.6% while it was 6.9% in FY18. GVA is a considered to be a more realistic proxy to measure economic activity.

The manufacturing sector grew 3.1% in January-March 2019, from 9.5% in the same quarter last year. For the whole year, the manufacturing sector stood at 6.9% in FY19 from 5.9% in FY18.

Factory output measured by the index of industrial production (IIP) contracted in March 2019, the first time in 21 months. This shows declining momentum of both investment and consumption.

Even core industries productions of steel, electricity, coal and cement are falling or have been stagnant in recent quarters.

The agriculture sector, which has been hit by falling farm produce prices and flat income growth, stood at -0.1% in January-March 2019 and 2.9% in FY19.

Over the last two years, farmers have been protesting in several states, demanding better prices and debt write-offs. Low retail prices may be heartening to consumers, but persistently low food prices, have meant that farmers' income have remained flat.

India's long slowdown in food prices may well be symptomatic of a problem of abundance. Low growth in farmers' income has been attributed to the BJP's loss in the Assembly elections of December 2018, particularly in Madhya Pradesh.

Procurement is taking place at higher prices only for 14 cereals by government agencies such as the Food Corporation of India (FCI). Vegetables, potatoes and onions however, are not procured by government agencies. That's why vegetable prices have crashed in wake of a plentiful harvest, the reports noted.

The new government has to quickly move on policies to raise farm incomes and also ensuring that retail inflation remains within the central bank's tolerable level of 4%.

Moving on to the news from the automobiles sector. Base effect, along with high finance cost and liquidity constraints continued to subdue automobile sales in May.

According to the reports, subdued consumer sentiment and the just concluded general election also had a major part in sales slowdown.

On Saturday, automobile major Maruti Suzuki India said its overall sales including that to original equipment manufacturer (OEM) for May declined by 22% to 134,641 units from 172,512 units' off-take recorded during the corresponding period of the last year.

The company's domestic sales (including to OEM) decreased 23.1% on a year-on-year basis to 125,552 units in May.

The automobile major's exports slipped 2.4% in May to 9,089 units from 9,312 units which were shipped out during the corresponding month of last fiscal.

On its part, Tata Motors reported a drop of 26% in its domestic sales in May 2019 at 40,155 units as against 54,290 units sold in May 2018, as market sentiments continued to be muted.

The company's sales from exports in May 2019 was at 1,563 units, lower by 58% over last May.

Reportedly, several factors like drop in retails in Bangladesh and Nepal, high stocks in SAARC region and slump in Middle East have affected the overall industry volumes in these markets.

Another automobile major Mahindra & Mahindra (M&M) reported a 3% fall in its overall sales to 45,421 vehicles in May as against 46,848 units sold in the year-ago month.

Automobile stocks opened the day on mixed note with Tata Motors and Escorts leading the losers.

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


Modi 2.0 Cabinet, Trump's Mexico Tariffs, and Top Cues in Focus Today
Pre-Open

India share markets ended marginally lower on Friday last week.

At the closing bell on Friday, the BSE Sensex stood lower by 117 points (down 0.3%) and the NSE Nifty closed down by 23 points (down 0.2%).

The BSE Mid Cap index ended the day up 0.2%, while the BSE Small Cap index ended the day down 0.7%.

Speaking of Indian share markets, what should be your investing strategy be for Modi's second term?

As per Richa Agarwal, Modi's victory seems to be the inflection point for a rebound in smallcap stocks.

If you are interested in riding the volatility and earning great returns in the long term, you could join Richa's small cap club and invest in these 4 solid small caps.

--- Advertisement ---
Acche Din Are Here Again…Sensex 100,000 To Follow

Modi's win has already caused the Sensex to soar significantly in celebration.

And we have no doubt that we could be looking at Sensex 100,000 in the years to come.

Early investors have the potential to get immensely rich…as long as they can identify the right opportunities.

Here's how we identify the best stocks to profit from.

Click here for full details on the 4 stocks that stand to benefit in the years to come…and lead to huge potential profits for investors.
------------------------------

Top Stocks in Focus Today

From the energy sector, HPCL share price will be in focus today as the company last week reported strong earnings in March quarter. Shares of the company also hit their 52-week high of Rs 331 last week on the back of a fall in crude oil prices.

HPCL reported 70% year-on-year (YoY) growth in net profit at Rs 29.7 billion in Q4FY19, on account of a better-than-expected performance in the marketing segment.

The state-owned oil marketing company's (OMC) board also recommended final equity dividend of Rs 9.40 per share for the financial year 2018-2019.

To know more about the company, you can read HPCL's latest result analysis on our website.

From the aviation space, Jet Airways share price will be in focus today as the grounded carrier said it won't approve its financial results for FY19. As per an article in The Economic Times, this is due to the ongoing search for a new investor as well as the massive attrition in its board and top management.

Modi 2.0 Cabinet

In the news from the macroeconomic space, it was announced that under the new NDA government Nirmala Sitharaman will be the new Finance Minister as well as Corporate Affairs Minister, while Rajnath Singh would be Defence Minister.

Under Modi 2.0 Cabinet, Amit Shah will become Home Minister while Piyush Goyal will be Commerce and Railway Minister.

Nitin Gadkari holds Road, Transport and Highways Ministery along with MSME, while RK Singh is appointed as Power Minister.

US to Hit Mexico with Export Tariffs

Last week, US President Donald Trump announced tariffs on Mexican imports.

Washington threatened to impose tariffs on imports from Mexico. Trump, in an announcement reported that a 5% tariff would be levied on all goods from Mexico with effect from June 1 and tariffs would remain in place till Mexico takes effective action to alleviate the flow of migrants.

Moreover, the announcement warned that tariffs would go up to 25% by October if Mexico did not take sufficient action.

The above development sent major currencies and crude oil trade on a negative note.

Rupee Continues Downtrend

The rupee witnessed selling pressure last week.

Meanwhile, Trump announcement of tariffs on Mexican imports is expected to keep the rupee's advance in check, the reports noted.

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 traders 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?

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