Indian Indices Continue Momentum; Sensex Ends 284 Points Higher
Closing

Indian share markets witnessed positive trading activity throughout the day today and ended on a strong note.

Extending gains for the sixth consecutive day, Indian stock markets edged higher on the back of huge buying seen in banking and auto sector.

At the closing bell, the BSE Sensex stood higher by 284 points (up 0.8%).

Meanwhile, the NSE Nifty closed higher by 82 points (up 0.8%).

The SGX Nifty was trading at 10,084, up by 105 points, at the time of writing.

The BSE Mid Cap index ended the day up by 0.3%.

While the BSE Small Cap index ended up by 1.2%.

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

Telecom stocks and Power stocks on the other hand witnessed selling pressure.

Asian stock markets ended on a positive note. As of the most recent closing prices, the Nikkei ended higher by 1.29%, while the Shanghai Composite gained 0.07%.

The Hang Seng ended higher by 1.37%.

The rupee is trading at 75.44 against the US$.

Speaking of stock markets, as per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, the Covid-19 crisis could be the best investing opportunity in small-cap stocks.

In her latest video, she talks about the stocks that will do well despite the lockdown.

Tune in to know more...

Stocks from the aviation sector were in focus today.

IndiGo share price was in focus as the company reported its March quarter results.

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The company reported a loss of Rs 8.7 billion in the January-March quarter versus a profit of Rs 5.9 billion in same period last fiscal.

Loss for the full year was Rs 2.3 billion compared to a net profit of Rs 1.5 billion the previous year.

Revenue for the March ending quarter grew just 4.5% to Rs 86.3 billion from Rs 82.6 billion a year earlier.

In a post-earnings conference call with analysts, CEO Rono Dutta said the airline made an operating profit in the month of January and February but a loss of Rs 3.8 billion for the month of March. The government suspended all airline operations on March 24 as part of a nationwide lockdown to prevent the spread of the Coronavirus.

Flights resumed from May 25 and airlines have on average been able to fill barely half their flights.

Dutta and the airline's chief financial officer Aditya Pande said the airline is taking various cash conservation and cost cutting measures to survive. They said salaries had been cut between 5%-25% for most staff and bonuses were deferred and leave without pay schemes implemented for May-July.

Apart from that, vendor contracts are being reworked. The company has also got to defer 50% of supplementary rentals for this year as those rentals are linked to how much aircraft fly and many will remain grounded for many months.

IndiGo incurred Rs 58.6 billion on supplementary rentals aircraft repair and maintenance for FY20, compared to Rs 36.8 billion a year earlier.

Pande said all of the above measures would help IndiGo save cash of Rs 30 to 40 billion over nine months.

We will keep you updated on how these measures help the company in the coming months. Stay tuned.

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Moving on to news from the commodity space, gold was witnessing selling pressure today.

Losses were seen tracking weakness in international spot prices that fell on reducing safe-haven appeal amid signs of a recovery in business activity as governments restart their economies.

On the MCX, August gold futures fell 0.20% to Rs 46,470 per 10 grams after tumbling more than Rs 500 in the previous session.

In the international market, gold fell for a second straight session on Wednesday as stocks jumped on hopes for further stimulus and optimism about an economic recovery, thereby dampening demand for the safe-haven metal.

Strong Indian rupee against the US dollar also pressurized the yellow metal prices.

Speaking of gold, note that the interest in gold has gone up ever since stock markets crashed in March.

Gold prices in the international markets are getting close to its all-time high.

Last month, gold prices hit a new high of Rs 47,980 tracking rally in global rates amid increasing US-China tensions and expectations of further stimulus from central banks. With this, gold rallied to its highest since October 2012, driven by economic damage concerns, US-China tensions, and massive monetary and fiscal stimulus.

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 we 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.

In one of his videos, Apurva Sheth, lead chartist at Equitymaster, compares gold and bitcoin. He explains, which is the better asset in this difficult economic situation.

Tune in to know more: Gold or Bitcoin: What Will You Go With?

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


Indian Indices Trade Higher; Bajaj Finance, ICICI Bank & SBI Top Gainers
12:30 pm

Share markets in India are presently trading on a strong note, tracking positive global cues.

Extending gains to the sixth straight day, benchmark indices edged higher taking cues from global markets as investors looked past the social unrest in the US and continued to focus on easing lockdown restrictions and prospects of economic recovery.

Optimism in the Indian market has been driven by positive sentiment across global markets as most of the economies are opening up after weeks of shutdown induced by coronavirus pandemic.

The BSE Sensex breached the 34,000-mark and is trading 497 points higher at 34,300 levels.

Meanwhile, the NSE Nifty also reclaimed the psychological level of 10,000, first time since March 13, and is trading up by 158 points.

The BSE Mid Cap index is trading up by 1.4%.

Meanwhile, the BSE Small Cap index is presently trading up by 2.2%.

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On the sectoral front, gains are largely seen in the banking sector and finance sector.

IT stocks, on the other hand are witnessing selling pressure.

The rupee is trading at 75.25 against the US$.

Gold prices are trading down by 0.2% at Rs 46,700 per 10 grams.

Speaking of the current stock market scenario, 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.

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

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, the Covid-19 crisis could be the best investing opportunity in small-cap stocks.

In her latest video, she talks about the stocks that will do well despite the lockdown.

Tune in now...

Moving on, market participants are tracking Vodafone Idea share price. Shares of the company surged over 10% today on the back of heavy volumes.

Yesterday, shares of the telecom operator soared 20% to hit a six-month high of Rs 7.87 on the BSE.

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Note that shares of the company have rallied sharply in the past few days after the company on Friday said it was constantly evaluating various opportunities but there was no proposal before the board of the firm as yet.

The clarification came after reports surfaced that Alphabet Inc's Google was eyeing about 5% stake in the telecom company.

On Friday, Vodafone Idea said, "as part of the corporate strategy, the company constantly evaluates various opportunities for enhancing the stakeholders' value. As and when such proposals are considered by the board of directors of the company warranting disclosures, the company shall comply with the disclosure obligations."

In news from the auto ancillaries sector, automobile components major Motherson Sumi on Tuesday reported a 68.4% decline in its consolidated net profit at Rs 1,356.6 million for the fourth quarter ended March 31, mainly affected by the coronavirus pandemic.

The company had posted a consolidated net profit of Rs 4,293.1 million in the corresponding period of the previous financial year.

The company's total revenue from operations in Q4FY20 stood at Rs 151.6 billion as against Rs 171.7 billion a year ago.

For the financial year 2019-20, the company's consolidated net profit stood at Rs 12.9 billion. It was Rs 21 billion in 2018-19.

The company said that the overall performance was affected by OEMs' (original equipment manufacturers) plant closures due to the coronavirus pandemic, especially in China and in parts of Europe.

The company's Chairman Vivek Chaand Sehgal said, "our consolidated revenues for this fiscal year have remained stable. Considering that global automotive sales have declined in the same period and that the coronavirus pandemic was already impacting China and parts of Europe in the fourth quarter, this is a strong performance under the circumstances."

Motherson Sumi share price is presently trading up by 2%.

In other news, Tata Motors has resumed operations across all its manufacturing plants in the country with Jamshedpur facility also getting approval on May 27, 2020.

Reportedly, around 59% of company's passenger vehicle showrooms, covering 69% of the retail market, have commenced operations.

To further shore up the liquidity, the company has issued commercial papers of Rs 35 billion and also raised Rs 10 billion through non-convertible debentures (NCDs).

Tata Motors share price is presently trading up by 4%.

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


Sensex Opens Over 500 Points Up; Banking and Finance Stocks Lead
09:30 am

Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.4% while the Hang Seng is up 1.1%. The Nikkei 225 is trading up by 1.2%.

A late-session rally pushed Wallstreet to solid gains on Tuesday as market participants looked past widespread social unrest and pandemic worries to focus instead on easing lockdown restrictions and signs of economic recovery.

Back home, Indian share markets opened higher.

The BSE Sensex is trading up by 514 points. The NSE Nifty is trading higher by 153 points.

Bajaj Finance and ICICI Bank are the top gainers on the BSE, up by 4.4 and 4% respectively.

Meanwhile, the BSE Mid Cap index has opened up by 1%.

BSE Small Cap index is trading higher by 1.2%.

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All sectoral indices are trading in green. Banking stocks are witnessing maximum buying interest. The index on the BSE is up by 2.8%. BSE Auto Index is also trading up by 2.2%.

Moving on, gold prices are currently trading down by 0.6% at Rs 46,796.

The rupee is currently trading at 75.36 against the US$.

Moving on to the news from FMCG sector.

Britannia Industries share price is in focus today after the company reported largely in-line numbers for the fourth quarter (Q4FY20) of the last financial year, despite the lockdown hitting revenue and profit growth by 7-10%.

The company stated that after the initial hiccups, the firm coped up well and witnessed 20% rise in revenues in April, and 28% in May, both year-on-year (YoY) aided by several measures.

Profit before tax (PBT) witnessed a marginal rise of 1.6% YoY. However, consolidated net profit rose 26.5% YoY helped by a lower tax outgo, with the firm migrating to the new tax regime.

Sequentially, it remained flat during this period.

As regards the impact of the pandemic on operations, Britannia stated the firm swiftly adopted to the changing landscape.

For the entire FY20, consolidated net profit rose 21% Consolidated revenues increased 5.4% in the last financial year.

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In the news from oil & gas sector. Oil rose on Wednesday to a near three-month high amid optimism that major producers will extend production cuts as the world recovers from the coronavirus pandemic.

Brent crude was up 0.6% at US$39.79, the highest since March 6, having gained 3.3% on Tuesday.

US West Texas Intermediate crude (WTI) gained 0.9% at US$37.14, also the highest since March 6.

The contract ended the previous session up 3.9%.

Note that crude oil prices have rebounded in recent weeks on anticipation of improved demand, after the coronavirus pandemic sapped worldwide consumption by roughly 30%.

Speaking of crude oil, on a year-to-date (YTD) basis, crude oil prices are down about 42%.

Crude Oil Prices Fall Sharply

Crude oil witnessed selling during the start of the year due to oversupply concerns amid subdued demand.

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Prices crashed further in March in what was the worst price dip since the 1991 Gulf War with Brent prices plunging to US$ 31 per barrel.

In April, crude oil futures crashed and briefly went to negative prices, implying that investors would need to pay buyers to take delivery of crude oil amid dwindling storage space.

What effects crude oil prices have on Indian stocks markets and the Indian economy remains to be seen. Meanwhile we will keep you updated on the latest developments from this space.

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


SGX Nifty Trades Higher, Moody's Downgrades India's Credit Rating, MSMEs Shut Shops, and Top Cues in Focus Today
Pre-Open

Indian stock markets ended on a strong note yesterday.

Extending gains to the fifth consecutive day, Indian stock markets edged higher even after Moody's Investors Service downgraded country's sovereign credit rating by a notch to the lowest investment grade with negative outlook.

Buying interest was seen as Prime Minister Narendra Modi assured that India would get its growth back.

Speaking at CII's annual session, Modi said making the economy strong post Covid-19 is the top priority now and that the government is making planned and systematic reforms.

At the closing bell yesterday, the BSE Sensex stood higher by 522 points (up 1.6%).

Meanwhile, the NSE Nifty closed higher by 153 points (up 1.6%).

The BSE Mid Cap index ended the day up by 1.2%.

While the BSE Small Cap index ended up by 1.8%.

SGX Nifty is currently trading up by 90 points, or 0.90% higher at 10,069 levels. Indian share markets are headed for a positive start today following the positive trend on SGX Nifty.

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Tata Motors share price was in focus yesterday as the company resumed operations across all its manufacturing plants.

NTPC share price was also in focus as the company announced its plan to foray into electricity distribution business and also offered to acquire 51% stake in two utilities of Anil Dhirubhai Ambani Group (ADAG) in Delhi.

Speaking of the current stock market scenario, note that the coronavirus impact has shaken markets worldwide. After all, 2020 has already seen one of the worst market crashes in history.

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.

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, the Covid-19 crisis could be the best investing opportunity in small-cap stocks.

In the video below, she talks about the stocks that will do well despite the lockdown.

Tune in to know more...

Covid-19 Affected MSMEs Start Shutting Businesses

According to a survey by the All India Manufacturers' Organisation (AIMO), about 35% of micro, small and medium enterprises and 37% of self-employed individuals have started shutting their businesses, saying they saw no chance of a recovery in the wake of the coronavirus outbreak.

The other 32% of the MSMEs said that recovery would take around 6 months, while only 12% expect it in three months.

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Last month, the government had announced various measures to help MSMEs, including collateral-free loans of Rs 3 lakh crore and a fund of funds for the sector that will invest Rs 500 billion as equity in small businesses.

The government's financial package has not reached the MSMEs and is also not adequate to make up for the loss of business activity during the lockdown period, AIMO said, adding that such a "mass destruction of business" was unprecedented.

Yesterday, the cabinet approved the expanded definition of micro, small and medium enterprises (MSMEs) and finalised modalities for the Rs 200 billion subordinate debt for stressed units, and Rs 500 billion fund to boost growth of the sector.

As per the new definition, a company with up to Rs 500 million investments and up to Rs 2.5 billion turnover is classified as a medium enterprise.

This is higher than the definition announced by finance minister Nirmala Sitharaman as part of the Rs 20 lakh-crore Aatma nirbhar Bharat package, which had pegged the investment limit for medium companies at Rs 200 million and turnover at Rs 1 billion.

Probe into Dealings of Closed MFs by Franklin Templeton

In news from the mutual funds space, the markets regulator has hired the services of a chartered accountant and forensic audit firm to probe into the dealings of six mutual fund schemes that were shut down by Franklin Templeton.

The Mumbai-based Chokshi & Chokshi LLP, which advises on tax, accounting, risk, and due diligence among other things, has been given the assignment.

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The firm is likely to investigate if there were collusion between the fund house and bond-issuing corporates, instances of conflicts of interest of directors or senior officials, and transactions that were prejudicial to the interest of investors in the schemes.

The regulator has asked the audit firm to submit its report in 30 working days.

On April 23, Franklin Templeton Mutual Fund announced the winding up of six of its yield-oriented debt schemes, in light of heightened redemption pressure and lack of liquidity in debt markets, following the Covid-19 outbreak.

According to estimates, around 3,00,000 investors are impacted by Franklin Templeton's move to wrap up six of its yield-oriented debt schemes.

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

Moody's Cuts India Credit Rating to Baa3

Moody's Investors Service cut long-term sovereign rating for India from 'Baa2' to 'Baa3', which is a notch above junk.

The global rating agency maintained its negative outlook, citing structural weaknesses, weak policy effectiveness, and slow reforms momentum even before the Covid-19 pandemic.

The change brings Moody's rating into line with Fitch and Standard and Poor's, both of which rate India BBB-, although they assign stable rather than negative outlooks.

Moody's had raised India's rating by a notch to 'Baa2' in November 2017. In November 2019, Moody's cut its outlook on India to negative from stable. A month later, Standard & Poor's had warned that if an economic recovery does not happen, a rating downgrade may follow.

A 'Baa3' rating is still investment grade, though it is the lowest rating in that grade.

Moody's latest action comes weeks after Finance Minister Nirmala Sitharaman presented the Rs 20 trillion stimulus package. The actual fiscal outlay of the package was less than Rs 2.3 trillion.

Moody's said implementation of key reforms, promised in Prime Minister Narendra Modi's first term, have been relatively weak and have not resulted in material credit improvements, indicating limited policy effectiveness.

The agency expects India's FY21 GDP growth to contract by 4% from 4.2% provisional estimates for FY20. It said that thereafter and over the longer term, growth rates will likely be materially lower than in the past.

Notably, India's GDP growth has been on a consistent decline after peaking out at 7.9% in Q4 of FY18 to 4.7% in Q3 of FY20, as can be seen in the chart below:

Declining GDP Growth for India

Interestingly, there's a silver lining in all this. India can become an outsourcing hub. The global slowdown will mean that countries like the US, will be looking out for low-cost outsourcing destinations like India.

Further, a lot of global buyers have already shifted to India to source ceramics, home appliances, fashion, and lifestyle goods.

Meanwhile, as per the reports, around a thousand foreign manufacturers want to relocate their production to India, a country they see as an alternative to China.

Here's an excerpt from one of the articles Tanushree Banerjee wrote on the Indian economic recovery:

  • It's also a fact that India's importance in the global supply chain has never looked better. PM Modi himself referred to that.

    Therefore, utilising the stimulus package to tighten India's presence in the global supply chain will be the fastest way to move up the Swoosh index. Any delay or disregard would cost India dearly.

    True that Apple, Samsung and several smartphone manufacturers are already considering an expansion of their Indian capacities.

    But the land, labour, liquidity, and legal reforms cannot remain on paper if the Make in India dreams are to be realised.

    I expect to gather more cues about India's prospects on the Swoosh index over coming months.

Watch this space as Tanushree tracks these Rebirth of India megatrends closely.

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