Indian markets recover

The Indian indices recovered by over 250 points in the final hour of trading after two sessions of sharp losses amid weak European cues. The BSE-Sensex and the NSE-Nifty were trading marginally in the red on the back of selling activity in metal, consumer durables, healthcare and auto sectors. However, buying in realty, oil and gas and capital goods stocks restricted the market losses. BSE Sensex closed lower by 24 points, while NSE Nifty, S&P BSE Midcap and S&P BSE Smallcap cap ended the day on a flat note.

With regards to the international markets, Asian markets finished mixed. The Shanghai Composite gained 0.76% and the Nikkei 225 rose 0.07%. The Hang Seng lost 0.38%. European markets are sharply lower today with shares in France bearing majority of the brunt. The CAC 40 is down 1.5%, while Germany's DAX is off 1.48% and London's FTSE 100 is lower by 1.42%.

The rupee breached the 64 mark by falling 28 paise to 64.18 against the dollar in the post noon session.

Shares of auto firm Eicher Motors plunged more than 5% after it was reported that Swedish truck maker Volvo AB is selling its remaining 3.7% stake in Eicher Motors, in a deal that could be valued at around US$ 278 m. Reportedly, Volvo is offering about 1 m shares in a price range of Rs 17,190-18,190 in an open market sale. Volvo bought the Eicher stake in 2008 as part of a deal under which the Swedish company also set up a separate truck and bus making joint venture with Eicher in India. In March, Volvo had sold 1.27 million Eicher shares for around US$ 296.05 m.

According to a leading financial daily, Vedanta Ltd, formerly Sesa Sterlite, has acquired 4.98% stake in Cairn India for US$ 315 m from a wholly owned subsidiary Twinstar Mauritius Holdings (TSMHL). The funds received by TSMHL will be used to service existing debt obligations at TSMHL. Vedanta' ownership in Cairn India does not change as a result of this share transfer. Vedanta India is a promoter in Cairn India. TSMHL had 39.41% stake in Cairn India at March end, while Vedanta's stake was 18.73%. Following the share transfer, Vedanta will continue to hold 59.9% in Cairn India of which 25.5% will be held directly and 34.4% held indirectly through TSMHL. Shares of Cairn India ended the day in the negative (down 0.64%) on the BSE.

Indian stock markets bleed
01:30 pm

After opening the day in red, the Indian share markets extended losses in the post-noon trading session. Sectoral indices are trading mixed with banking and mining bearing the maximum burnt. Software stocks are witnessing buying interest.

BSE-Sensex is down 199 points (0.7%) and NSE-Nifty is trading 50 points down (0.6%). BSE Mid Cap is trading lower by 0.5% and BSE Small Cap index is trading down by 0.6%. Gold, per 10 grams, is trading at Rs 26,760 levels. Silver, per kilogram, is trading at Rs 37,861 levels. Crude oil is trading at Rs 3,822 per barrel. The rupee is trading at 64.13 to the US dollar.

Stocks in the banking sector are witnessing mixed activity with ICICI Bank and Dhanlaxmi Bank leading the losses. Stock of Axis Bank is witnessing buying interest as the Reserve Bank of India (RBI) today lifted the restrictions placed on the purchase of shares of the bank by foreign investors. This allowance was granted because of the total shareholding of FIIs (foreign institutional investors) /RFPIs (Registered Foreign Portfolio Investors) in the bank has gone below the threshold limit. As per the data, for the quarter ended March 2015, FIIs held 46.64% in Axis Bank. Currently Axis Bank is trading at 553 levels, up 0.4%.

Telecom stocks today are also trading mixed with Himachal Futuristic and AGC Networks witnessing maximum selling pressure. Bharti Airtel, the largest wireless service provider in India, has approached the global debt market to fund its capex (capital expenditure). The company on Wednesday entered the global bond market to raise $1 bn through a 10-year bond sale programme. For this deal the company has appointed six merchant bankers, which include Bank of America-Merrill Lynch, Barclays, Deutsche Bank, HSBC and Standard Chartered among others. For the quarter ended March 2015, the company had posted a 31% rise in net profit while its African business continued to witness losses. At the time of writing, the stock of Bharti Airtel was trading down nearly 0.9%.

Indian Markets open flat
09:30 am

The major Asian stock markets have opened the day on a mixed note with markets in Hong Kong (down1.9%) and China (down 1%) being the leading losers. However, stock markets in Japan (up 0.4%) and Singapore (up 0.06%) were leading among the few gainers. Stock markets in US and Europe closed their session on a positive note. Crude oil prices plunged nearly 2.3%, at Rs 3,830 per barrel. Precious metal gold is trading marginally down while silver is trading down by 1.3%

Indian stock markets have opened the session on a flat note today. BSE Sensex and NSE-Nifty are trading marginally, both up by 0.2% each. BSE Mid Cap and BSE Small Cap indices are trading in the green, up by 0.3% and 0.5% respectively. Among the sectoral indices, auto stocks are witnessing selling interest while energy stocks are leading the gains. The rupee is trading at 64.17 per US dollar.

Engineering stocks have opened mixed today. As per a leading financial daily, Larsen & Toubro Ltd (L&T) has bagged a contract from the Ministry of Defence worth Rs 46.8 bn. The contract is for the design and construction of a floating dock for the Indian Navy. This dock will boost infrastructure of the Navy for docking of warships and submarines for repair and refit. The company also stated that the dock will conform to international standards and incorporate fully automated Ballast Control System. Meanwhile, the company is also executing MoD contract for design and construction of 54 fast Interceptor Boats (IBs) for the Indian Coast Guard (ICG).

Majority of Energy stocks have opened the day on a mixed note. As per the financial daily, State refiners Indian oil corporation and HPCL are into talks with Iraq's national oil company to buy 4 million barrels of Basra light crude oil. The Indian authorities in March had asked the state refiners to look for two very large crude carriers of Iraq's Basra crude oil. However, the spot market for Basra crude prices seemed quite pricey and these refiners will have to pay premium for spot oil purchases. Hence the refiners had decided to directly negotiate with Iraq's State Oil Marketing Organisation for the supplies in next two to three months.

How to approach volatile markets?

The last two days have been quite unnerving for equity investors. After a bull rally that started last year and drove benchmark indices to their lifetime highs, the recent correction in the stock markets has been nothing less than a rude shock for investors. BSE-Sensex has lost 1000 points in just two days. As an article in Firstpost suggests, 4.45 lakh crore of wealth has been eroded in 2 days.

Indeed, retail investors have been one of the worst victims of this correction. Only months back, when brokers were selling Sensex at 40k, few paid heed to the warning that stock markets were running ahead of fundamentals. It took a combination of poor earnings season, loss of confidence of foreign institutional investors (FIIs), RBI's guidance that a limited room is left for further rate cuts and most recently, a weak monsoon forecast for markets to wake up to the ground realities. And the sharp correction just underscores how slippery the grounds were for gains.

So how should investors approach the volatile markets?

First of all, investors need to understand that volatility is a part and parcel of investing in equity markets. In a little over last two decades, there have been multiple bull rallies and some serious corrections. And overtime, the returns have been good.

If you as investor can practice long term value investing, such volatility could be your best friend. So find the stocks with good fundamentals, and pay a price that they justify. Such corrections could be an opportunity to bring such stocks close to or within the comfort zone as far as valuations are concerned. Most importantly, keep your portfolio diversified to minimize the risks. And then all you need to do is nothing and let the fundamentals play. The key is not to get panicked by corrections and have the disciplined mindset of a long term value investor. If you can take that challenge, the power of compounding could earn you huge returns overtime.