Sensex Ends 429 Points Higher; Auto and IT Stocks Rally
Closing

Indian share markets extended gains for the second consecutive day and ended on a strong note, tracking gains in Asian peers and Wall Street.

Banking and finance stocks rallied as the special liquidity scheme (SLS) trust to rescue NBFCs, announced under the Atmanirbhar Bharat Abhiyan relief package came into effect on 1 July.

Sentiment also got a boost after it was reported that India's unemployment rate fell to 11% in June from 23.5% in May, as economic activities resumed after government eased lockdown curbs.

At the closing bell, the BSE Sensex stood higher by 429 points (up 1.2%).

Meanwhile, the NSE Nifty closed higher by 121 points (up 1.2%).

The SGX Nifty was trading at 10,540, up by 141 points, at the time of writing.

The BSE Mid Cap index ended up by 1%, while the BSE Small Cap index ended the day up by 0.9%.

On the sectoral front, gains were largely seen in the auto sector and IT sector.

{inlineads1}

Asian share markets ended on a positive note today. As of the most recent closing prices, the Shanghai Composite stood higher by 2.13%, while the Nikkei ended up 0.11%.

The rupee is trading at 74.81 against the US$.

The rupee today advanced 59 paise, its biggest single-day gain since April 23, to close at 75.01 against the US dollar, boosted by gains in the domestic equity market amid weakness in the greenback.

Speaking of stock markets, in his latest video, Rahul Shah talks about a penny stock investing strategy that aims to maximise profits and at the same time, keep losses to a bare minimum.

He talks about a proven blueprint that you can use again and again to zero in on multi-bagger penny stocks on a consistent basis.

Tune in to find out more...

Eveready Industries was among the buzzing stocks today.

The stock of Eveready Industries witnessed huge buying interest today and hit fresh 52-week high after the firm reported a three-fold rise in net profit for FY20.

The company reported over three-fold jump in its net profit at Rs 1,795.7 million for the financial year 2019-20, compared to Rs 472.6 million in the last fiscal.

In Q4FY20, the net profit rose multi fold to Rs 637.3 million against Rs 40.4 million in Q4FY19.

{inlineads2}

The profitability was aided by rise in gross margin in the core segments of batteries and flashlights and improvement in operating margin due to additional cost savings measures.

The company further said that the discontinuance of the packaged tea business further helped the company in improving margins and releasing working capital.

It added that the turnover for the quarter and the year was lower than that in the previous year as the segments of lighting and appliances were adversely impacted. Furthermore, discontinuance of the packet tea segment decreased turnover by Rs 404 million during the year (Rs 187 million during the quarter).

Moving on, as per an article in the Economic Times, China is at the centre of the discovery of what may be one of the biggest gold counterfeiting scandal in recent history.

According to a report in Zero Hedge, not only does it involve China, but it emerges from a city that has become synonymous for all that is scandalous about China: Wuhan.

It is that the 83 tons of purportedly pure gold stored in creditors' coffers by Kingold as of June, backing the 16 billion yuan of loans, would be equivalent to 22% of China's annual gold production and 4.2% of the state gold reserve as of 2019.

{inlineads3}

In short, more than 4% of China's official gold reserves may be fake. And this assume that no other Chinese gold producers and jewelry makers are engaging in similar fraud.

Here's an excerpt from the article in The Economic Times...

  • As for the gold, several billion in gold bars never existed and yet resulted in a cascade of subsequent cash flow events allowing tens of billions in funds to be released, "benefiting" not only founder Jia, but China's broader economy.

    Which is terrifying because whereas just after the financial crisis China was engaged in building ghost cities, everyone knew these were a symbol of demand that would never materialize, even if the cities themselves did exist. However, it now appears that a major part of China's subsequent economic boom has been predicated on tens of billions in hard assets -- such as gold -- which simply do not exist, the report said.

It will be interesting to track how this discovery pans out in the coming days. We will keep you updated on all the news from this space. Stay tuned.

In other news from the commodities space, gold retreated from its all-time high witnessed yesterday and saw some profit booking in the morning session today.

Losses were seen on the back of optimism over a potential vaccine and better than expected economic readings which lifted investors' appetite for riskier assets.

Note that domestic gold prices hit an all-time high yesterday tracking a global rally, as surging coronavirus cases in many countries raised the metal's safe-haven appeal.

Gold is also in focus lately after US Federal Reserve Chairman Powell said last week that output and employment remain far below their pre-pandemic levels and cautioned that the outlook for the economy is "extraordinarily uncertain."

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.

As per Vijay Bhambwani, editor of Weekly Cash Alerts at Equitymaster, the recent developments in bullion market may put some short-term pressure on gold prices.

In his latest video, he shares his thoughts on gold, especially in view of three events which have recently transpired in the gold market.

You can check the same here: These 3 Recent Events Will Impact the Price of Gold.

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


Sensex, Nifty Extend Gains; M&M and Hero MotoCorp Surge Over 4%
12:30 pm

Share markets in India have extended early gains and are presently trading higher, tracking gains in Asian peers and Wall Street.

Banking and finance stocks rallied as the special liquidity scheme (SLS) trust to rescue NBFCs, announced under the Atmanirbhar Bharat Abhiyan relief package came into effect on 1 July.

Sentiment also got a boost after it was reported that India's unemployment rate fell to 11% in June from 23.5% in May, as economic activities resumed after government eased lockdown curbs.

The BSE Sensex is trading up by 382 points, up 1.1%, at 35,800 levels. Meanwhile, the NSE Nifty is trading up by 105 points.

The BSE Mid Cap index is trading up by 0.6%. The BSE Small Cap index is trading up by 0.9%.

{inlineads1}

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

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

The rupee is trading at 75.48 against the US$.

Gold prices are trading down by 0.2% at Rs 48,199 per 10 grams.

Speaking of stock markets, in his latest video, Rahul Shah talks about a penny stock investing strategy that aims to maximise profits and at the same time, keep losses to a bare minimum.

He talks about a proven blueprint that you can use again and again to zero in on multi-bagger penny stocks on a consistent basis.

Tune in to find out more...

Moving on, Ruchi Soya Industries and Alok Industries are among the buzzing stocks today. The markets regulator is probing into the recent jump in share prices of both the companies.

The capital market regulator has sought details of unusual trades in the two stocks from stock exchanges.

{inlineads2}

Alok Industries, which was re-listed on February 27 after the restructuring of equity, has run up 1,256% since April.

The Mumbai-based textile manufacturer was acquired by Reliance Industries along with JM Financial Asset Reconstruction Company last year through NCLT.

Meanwhile, edible oil maker Ruchi Soya, which was acquired by Baba Ramdev's Patanjali Group through a bankruptcy sale, has been one of the top performers on Dalal Street of late.

After getting relisted on January 27, shares of the company have rallied 8,819%, valuing the company at about Rs 503.6 billion.

People familiar with the matter said that the regulator is investigating whether there have been instances of circular trading in the two stocks.

Speaking of Ruchi Soya, the unstoppable rally in shares of the company has made the edible oil maker one of the top 60 companies on Dalal Street in terms of market capitalisation.

Market Darling of 2020

In terms of market-cap, Ruchi Soya is now bigger than companies like Lupin, Aurobindo Pharma, Biocon, JSW Steel and Marico among others.

After a sharp rally in the stock price, analysts have turned cautious on the stock. They feel markets regulator should take note and probe what is driving the ongoing rally on the counter.

{inlineads3}

They said the market regulator should ask the company when it is planning to meet the minimum public shareholding norms of 25%.

As of March 31, 2020, the promoters held 99.03% stake in the company. Retail investors currently own less than 1% in the company.

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

Moving on to news from the automobile sector, as per an article in The Economic Times, auto and two-wheeler companies clocked sharp month-on-month sales increase in June as pent-up demand and revival in economic activity drove purchases of sedans, SUVs and motorbikes across the country.

Here's an excerpt from the article:

  • Industry estimates that as many as 116,449 passenger vehicles were sold in the local market last month compared with 36,697 units in May 2020. With this, passenger vehicle wholesale sales recovered to nearly half the volumes of 239,137 units recorded in June last year.

Hero MotoCorp, Mahindra & Mahindra and TVS Motor came close to achieving 100% of the pre-Covid-19 sales numbers set in February.

Hero MotoCorp saw sales grow four-fold to 450,744 units over May. The numbers were 27% down year-on-year.

Timely monsoon arrival coupled with record rabi harvest helped grow tractor sales. Mahindra sold 35,844 tractors last month, an increase of 12% over 31,879 units sold in the year-ago period.

Year-on-year (YoY) sales showed a sharp fall but industry executives said they were optimistic about steady demand in the coming months after the June performance.

Maruti Suzuki posted a nearly four-fold month-on-month increase in June numbers with YoY sales falling 53%. The country's biggest car maker sold 51,274 units in June compared with 13,865 units in May and 111,014 units in June 2019.

In other news, Tesla Inc. displaced Toyota Motor Corp. as the world's most valuable automaker.

In January, Tesla became the world's second-most valuable automaker, when it surpassed Volkswagen AG. It's now worth more than twice the German giant.

Shares of Tesla, which have more than doubled since the start of the year, climbed as much as 3.5% intraday today, giving it a market capitalization of US$ 207.2 billion, surpassing Toyota's US$ 201.9 billion.

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


Sensex Opens Higher; Banking and Realty Stocks Lead
09:30 am

Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.8% while the Hang Seng is up 1.5%. The Nikkei 225 is trading up by 0.7%.

Meanwhile, the S&P 500 and Nasdaq indices closed higher on Wednesday to kick off the third quarter as increasing optimism for a safe and effective COVID-19 vaccine eased concerns that another round of business lockdown was likely.

Back home, Indian stock markets opened higher.

The BSE Sensex is trading up by 262 points. The NSE Nifty is trading up by 75 points.

Meanwhile, the BSE Mid Cap index has opened up by 0.3%.

BSE Small Cap index is trading higher by 0.4%.

All sectoral indices are trading in green with BSE Bankex witnessing maximum buying interest.

{inlineads1}

Moving on, the rupee is currently trading at 75.44 against the US$.

Gold prices are currently trading down by 1% at Rs 48,267.

Speaking of the current stock market scenario, the last few months have witnessed the kind of shifts that most investors would recall as once in a lifetime.

The Sensex is up 34% from the lows in March 2020. At that time, it had declined by over 20%. That seemed to suggest the start of a bear market.

What's Driving the Markets?

So, what's driving the markets?

As per Richa Agarwal, editor of Hidden Treasure, an important driver of this rally is the inflow from global funds, now that the global economies have opened the liquidity tap.

A lot of this money is coming to the mid and smallcap space.

{inlineads2}

In such times, co-head of research, Rahul Shah has been talking about penny stock investing strategy that aims to maximise profits and at the same time, keep losses to a bare minimum.

In the video below, he tells us about a proven blueprint that you can use again and again to zero in on multi-bagger penny stocks on a consistent basis.

Tune in now...

Moving on to the stock specific news...

Coal India is among the top buzzing stocks today.

Coal India reported a 12.8% fall in production in June, reflecting the third straight month of decline in output as national coronavirus lockdowns cut demand for the fuel.

Coal output fell to 39.2 million tonnes in June, compared with 45 million tonnes in the same period the previous year.

Offtake by customers, such as power generators, fell to 41.6 million tonnes in June.

{inlineads3}

The company saw its annual production fall during the year ended March 2020, marking the first such decline in over two decades.

India used nearly a billion tonnes of coal in FY20, about three-quarters of it at power plants. State-run Coal India accounts for over 80% of the country's production.

As per the reports, electricity demand fell 9.9% in June, suggesting a recovery amid greater consumption in industrial western states as India slowly lifts restrictions and allows factories and offices to operate.

Meanwhile, Coal India trade unions will go ahead with the proposed three-day strike from today as talks with the government over opening of the sector to private players have failed, reports noted.

A virtual meeting was held between Coal Minister Pralhad Joshi and representatives of trade unions on Wednesday, Nathulal Pandey.

How this pans out going forward remains to be seen.

Coal India share price opened the day flat.

Moving on to another news. Hitachi and ABB India announced that they have launched a US$11 billion joint venture company Hitachi ABB Power Grids Ltd.

ABB's alliance with Hitachi will facilitate expansion opportunities for the new entity in areas such as mobility, smart cities, industry, energy storage and data centers, besides providing financial muscle to support ambitious projects and enabling access to Japan, the third largest economy in the world.

Under the JV agreement, originally announced in December 2018, Hitachi will acquire the remaining 19.9% stake of Hitachi ABB Power Grids to make it a wholly owned subsidiary after 2023.

As per the company, Hitachi's digital technologies merged with power grid solutions will help ABB to play an active role in the global transformation and decarbonization of energy systems for a sustainable energy future.

ABB share price opened the day up by 1%.

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


SGX Nifty Up 76 Points, Gold Hits Record High, ONGC Q4 Results, and Buzzing Stocks in Focus Today
Pre-Open

Indian share markets ended on a strong note yesterday, taking cues from global stock markets.

Sentiment got a boost after the World Bank said it will give US$ 750 million as loan to India for strengthening small businesses that form the backbone of the country's economy and were devastated in the coronavirus pandemic.

The emergency lending will ensure liquidity for some 1.5 million micro, small and medium enterprises (MSME) and protect millions of jobs, said the Bank in a statement.

India's current account turned positive in the last quarter of the 2019-20 fiscal year as a result of lower trade deficit and a sharp rise in net invisible receipts, the first quarterly surplus in 13 years.

At the closing bell yesterday, the BSE Sensex stood higher by 499 points (up 1.4%).

Meanwhile, the NSE Nifty closed higher by 128 points (up 1.2%).

{inlineads1}

The BSE Mid Cap index ended up by 0.2%, while the BSE Small Cap index ended up by 0.4%.

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

At 8:30 am today, the SGX Nifty was trading up by 76 points, or 0.73% higher at 10,475 levels. Indian share markets are headed for a positive opening today following the positive trend on SGX Nifty.

Speaking of Indian stock markets, in his latest video, Rahul Shah talks about a penny stock investing strategy that aims to maximise profits and at the same time, keep losses to a bare minimum.

He talks about a proven blueprint that you can use again and again to zero in on multi-bagger penny stocks on a consistent basis.

Tune in to find out more...

Top Stocks in Focus Today

Bharti Airtel will be among the top buzzing stocks today.

This comes as US-based Carlyle Group will invest US$235 million in Bharti Airtel's data centre business, Nxtra Data. Reportedly, Carlyle will hold an approximately 25% stake in the business on completion of the transaction, with Airtel continuing to hold the remaining stake of approximately 75%.

Nxtra will use the proceeds from deal to continue to scale up its infrastructure and offerings across the country.

{inlineads2}

Vodafone Idea share price will also be in focus as the company's pre-tax loss rose 73% YoY to Rs 117.4 billion in the March quarter of FY20 owing to exceptional expenses.

While the firm's revenue remained flat on a year-on-year (YoY) basis, the loss widened due to Rs 61.4 billion worth of exceptional items, which included costs related to merger and integration, additional provisioning for depreciation and impairment, and one-time spectrum charges.

ONGC Reports First-Ever Quarterly Loss

Oil and Natural Gas Corporation (ONGC) posted a pre-tax loss of Rs 105.3 billion in the fourth quarter of the financial year 2019-20 (Q4FY20).

This was ONGC's first-ever quarterly loss. Reportedly, the loss was due to a drop in crude oil prices, the impact of the Covid-19-induced lockdown, and exchange losses.

The company's director of finance, Subhash Kumar, said that the combined impact of reduced demand, Covid-19, reduced offtake and lower crude prices had an impact on the company's numbers to the tune of Rs 49 billion.

He added that another major factor was foreign exchange losses. The rupee had depreciated heavily during the quarter, resulting in a loss of Rs 11.1 billion on exchange rate variation, as against a gain of over Rs 2 billion during the same time last year.

{inlineads3}

The company's revenue from operations declined by 7% to Rs 1,044.9 billion in the quarter under review, compared to Rs 1,125.4 billion the previous year.

During Q4FY20, the company's net realisation on crude was seen US$ 49.01 a barrel, as against US$ 61.93 a barrel a year ago.

Gas price for the quarter was also lower at US$ 3.23 per million metric British thermal unit (mmBtu), compared to US$ 3.36 a mmBtu in the year-ago period.

For the whole of FY20, the company's profit before tax fell by 65% to Rs 190.7 billion as against Rs 548.5 billion in FY19.

Revenue from operations saw a 6% drop from Rs 4,536.8 billion in FY19 to Rs 4,250 billion in FY20.

Gold Prices Hit an All-Time High

Domestic gold prices hit an all-time high yesterday, tracking a global rally, as surging coronavirus cases in many countries raised the metal's safe-haven appeal.

August gold futures on MCX hit an all-time high of Rs 48,871 per 10 grams in early trade yesterday, taking their gains to 25% in 2020 so far.

Tracking gold, silver futures surged past the 50,000-mark to Rs 50,779 per kg. Silver had surged about 3% in the previous session.

In global markets, gold hit US$ 1800 per ounce in New York's Comex Futures, the highest in eight years, lifted by investors seeking a safe bet as the world battles coronavirus pandemic.

US Federal Reserve Chairman Powell said last week that output and employment remain far below their pre-pandemic levels and cautioned that the outlook for the economy is "extraordinarily uncertain."

In 2011, gold reached above US$ 1900 and then fell sharply to consolidate at lower levels for years after falling to near US$ 1,000.

As per Vijay Bhambwani, editor of Weekly Cash Alerts at Equitymaster, the recent developments in bullion markets may put some short-term pressure on gold prices.

In his latest video, he shares his thoughts on gold, especially in view of three events which have recently transpired in the gold market.

You can check the same here: These 3 Recent Events Will Impact the Price of Gold.

Fitch Ratings Cut India's Growth Forecast to 8% for FY22

Fitch Ratings cut India's growth forecast for 2021-22 fiscal to 8% from 9.5% projected last month.

It, however, retained its projection of Indian economy contracting by 5% in the current fiscal.

Indian economic growth stood at an estimated 4.2% in FY20.

In its June update of Global Economic Outlook, Fitch projected Indian economy to grow 5.5% in FY23.

Note that, S&P has forecast a 5% contraction in the fiscal year starting April, and the growth to recover to 8.5% next fiscal.

Moody's expects India's real GDP to contract by 4% in fiscal 2020 due to the shock from the coronavirus pandemic and related lockdown measures, followed by 8.7% growth in fiscal 2021 and closer to 6% thereafter.

Speaking of the coronavirus impact on Indian economy, note that the Indian economy was grappling with its own issues and Covid-19 has made matters worse.

The industry was facing demand problems, due to which business houses were reluctant to undertake capex plans. Unemployment was at its peak and exports were consistently down for several months.

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.

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