Sensex Closes 235 Points Higher; Telecom & Bank Stocks Lead

Indian share markets erased their day's losses and were trading on a positive note in afternoon session. At the closing bell, BSE Sensex ended up by 235 points, while, NSE Nifty ended up by 66 points.

Sectoral indices ended on a mixed note with realty stocks, and IT stocks witnessing maximum selling pressure. While, telecom stocks and bank stocks ended the day in green.

Globally, Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.9%, while the Hang Seng led the Shanghai Composite lower. They fell 0.4% and 0.3% respectively. European markets finished mixed as of the most recent closing prices. The DAX gained 0.2%, while the CAC 40 led the FTSE 100 lower. They fell 1.5% and 0.5% respectively.

Speaking of stocks and portfolio, if you wondering whether the boring stocks will do well against smallcaps as well as asset classes like gold and fixed income over the long term, take a look at this chart.

Boring Bluechips are Necessary for Risk Hedged Returns

The BSE 500 which represents a mix of bluechip and midcap stocks, underperformed the BSE smallcap index only over the 5-year period.

And even in a year of sharp market correction (like 2018), the correction in the index is much lesser than that of the smallcap index.

So, keep your watch on stocks that are safe, time tested and borderline boring.

In the news from the currencies space, the rupee was trading at 69.79 to the dollar in the morning trade. It hit a low of 70.06 and a high of 69.75 in the course of trading today.

The rupee has gained on increased selling of the US currency by exporters and banks. However, a lower opening of the domestic equity markets capped the rise, the reports noted.

At the Interbank Foreign Exchange, the rupee opened on a strong note at 69.79 a dollar against the previous close of 70.14. Further, the domestic unit surrendered early gains to quote at 69.95, showing a gain of 19 paise.

On Monday, the rupee had recovered 4 paise to close at 70.14 against the American currency, following weak crude oil prices and the dollar's losses in global markets due to political uncertainty in the US.

Meanwhile, the benchmark Sensex plunged over 300 points as investors turned jittery over political uncertainty in the US and fears of a global economic slowdown amid a heavy sell-off by foreign investors.

Note that, the rupee is the worst performer in Asia in 2018. It has fallen by around 12% against the US dollar this year.

This selling pressure was seen on the back of a strong dollar and high oil prices. Similarly, the spill-over from the emerging-market turmoil in Argentina and Turkey weighed on the rupee.

However, in the near term, the rupee being under pressure could benefit export-oriented businesses.

Moving on to the news from pharma sector. In the latest development, Zydus Cadila has received final approval from the US health regulator to market Doxycycline Hyclate delayed-release tablets. It is used to treat bacterial infections.

Reportedly, Zydus Cadila has received the final approval from the United States Food and Drug Administration (USFDA) to market the drug in the strengths of 75 mg, 100 mg and 150 mg.

Zydus Cadila said the drug will be produced at the group's formulations manufacturing facility at SEZ, Ahmedabad.

Meanwhile, the group has also received tentative approval for Febuxostat tablets in the strengths of 40 mg and 80 mg. It is used to treat hyperuricemia (constantly high levels of uric acid) in adults who have gout.

The group has more than 241 approvals, and so far, it has filed over 340 abbreviated new drug applications (ANDAs) since it started filings in 2003-04.

Cadila Healthcare share price ended the day down by 0.6%.

To know more about the company, you can access to Cadila Healthcare's Q2FY19 result analysis and Cadila Healthcare's 2018-19 Annual Report Analysis on our website.

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

Sensex Trades Lower; Realty & IT Stocks Drag
12:30 pm

Share markets in India are presently trading on a negative note. Barring consumer durables sector, all sectoral indices are trading in red with stocks in the realty sector, IT sector and energy sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 180 points (down 0.5%), while the NSE Nifty is trading down by 48 points (down 0.5%). The BSE Mid Cap index and the BSE Small Cap index are trading down by 0.9%.

Speaking of the broader share markets, how has the Sensex performed compared to BSE-Midcap and BSE Smallcap during downturns?

Sarvajeet Bodas shares one of the exercises he did to check this and the results that showed up in one of the recent editions of The 5 Minute WrapUp.

Here's an excerpt of what he wrote...

  • The starting point of the exercise was the economic downturn of 2008.

    During this time, the BSE-Sensex was down 38% compared to -54% and -59% of BSE-Mid and BSE-Small index respectively.

    Similarly, during the period of 'policy paralysis' of 2011-12, the large-cap index outperformed both the indices.

    FY16 was an exception where the large-cap index underperformed.

    Nevertheless, during the current calendar year, the BSE-Sensex outperformed by a wide margin and is currently giving a positive return of 6% compared to -17% and -27% of BSE-Mid and BSE-Small indices respectively.

Here's how this data looks like when plotted on a chart...

Large-Cap Index Outperformed in the Downturn

Clearly, in the face of such volatility, you need a balance of growth and safety.

Safe stocks will offer you that safety.

To get started, I recommend Tanushree's special report - 7 Stocks To Profit From This Market Crash.

If you are a StockSelect subscriber, you can read the report here.

If you want to access to this special report, all you need to do is sign up here.

The rupee is trading at Rs 69.94 against the US$.

The rupee climbed 30 paise in early trade today following weak crude oil prices and losses in dollar because of political uncertainty in the US.

In the last few sessions, the rupee has been strengthening against the US$. Last week, dollar came under pressure after the Federal Reserve in its policy statement mentioned that rate hike in the coming year could be restricted to two compared to earlier estimates of three rate hikes next year.

In the news from the FMCG sector, Hindustan Unilever share price (HUL) is witnessing selling pressure today after the National Anti-Profiteering Authority (NAA) slapped a Rs 3.8 billion fine for GST profiteering.

The NAA said HUL did not pass on the benefit of GST rate cuts to the consumers. In September, the regulator had ruled that suppliers would be liable to pay penalty for not passing the benefits of GST rate reduction on the sale of goods.

Shares of the company dropped around 2% on back of the above news.

Earlier this year, the company voluntarily submitted Rs 1.6 billion as the profiteering amount to the government.

To know more about the company, you can read HUL Q2FY19 result analysis and HUL Annual Report analysis on our website.

In another news, Jubilant Foodworks share price, which operates the Domino's franchise is also witnessing selling pressure on concerns of rising employee expenses and higher base and more intense competition from food aggregators.

Shares of the company slipped 5%, extending their 10% fall in the past two trading days.

Last week, Swiggy raised $1 billion in fresh funding led by South African internet and media conglomerate Naspers. Swiggy plans to use the capital to grow its supply chain, apart from investing in new initiatives such as setting up cloud kitchens.

Reportedly, the rising scale of food aggregators poses competition for Domino's both in terms of revenue and food options.

Moving on to the news from the commodity space, oil prices are trading on a mixed note as the US benchmark rebounded from steep losses in the previous session, even though concern over the health of the global economy continued to overshadow the market in the longer term.

Global markets have been under pressure on worries about a global economic slowdown amid higher US interest rates and the US-China trade dispute.

On Tuesday, Russian energy minister Alexander Novak said that oil prices would become more stable in the first half of 2019, supported by OPEC and non-OPEC countries' joint efforts to cut output.

Oil prices have been pulled down sharply since October by signs of an economic slowdown. Meanwhile the two world's biggest economies, the United States and China, are locked in a trade war which is threatening to slow global growth and battering investor sentiment.

It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments from this space.

Indian Share Markets Open Weak; Oil & Gas Stocks Buck the Trend
09:30 am

Global stock markets are under pressure after another rout this week as US political uncertainty added to heightened concerns over slowing global economic momentum. Asian equities are trading mixed today following the plunge in Wall Street on Christmas eve.

Back home, India share markets opened on a negative note. The BSE Sensex is trading down by 281 points while the NSE Nifty is trading down by 70 points. The BSE Mid Cap index opened down by 0.8% while BSE Small Cap index opened down by 0.9%.

Barring oil & gas stocks, all sectoral indices have opened the day in red with IT stocks and realty stocks leading the losers.

The rupee is currently trading at Rs 69.81 against the US$.

With the global uncertainty, there is a lot of negativity in the air.

November was a good month for the market, but the sentiment now has turned down again.

And that is the crucial point. It is times like these that throw up great buying opportunities in safe stocks.

Look at this chart...

Safety Beats Growth in 2018

Co-head of Research at Equitymaster, Tanushree Banerjee is am a firm believer in safe stock investing.

She has started recommending carefully chosen safe stocks to her subscribers.

Pharma stocks are trading on a negative note with Orchid Pharma & Indoco Remedies witnessing maximum selling pressure. As per an article in a leading financial daily, Aurobindo Pharma has received final approval from the US health regulator to market anaesthesia drug Vecuronium Bromide Injection.

Reportedly, the company has received final approval from the US Food and Drug Administration (USFDA) to manufacture and market Vecuronium Bromide Injection in the strengths of 10mg and 20mg.

The approved product is a generic equivalent of Organon's Norcuron Injection.

As per IQVIA data, the approved product has an estimated market size of US$ 11 million for the 12 months ending September 2018.

Note that, this is the 58th abbreviated new drug application (ANDA) to be approved out of unit IV formulation facility in Hyderabad used for manufacturing general injectable and ophthalmic products.

Aurobindo now has a total of 397 ANDA approvals (369 final approvals including 20 from Aurolife Pharma LLC and 28 tentative approvals) from USFDA.

Aurobindo Pharma share price opened the day down by 1.4%.

To know more about the company, you can access to Aurobindo Pharma's Q2FY19 result analysis and Aurobindo Pharma FY18 annual report analysis on our website.

Moving on to the news from IPO space. As per an article in a leading financial daily, Bengaluru-based real estate developer Shriram Properties Ltd has filed draft documents with markets regulator for an initial public offering (IPO).

The company, part of the Shriram Group, plans to raise up to Rs 2.5 billion in fresh capital through the IPO.

As per the reports, the overall size of the Shriram Properties IPO is expected to be around Rs 12 billion as several existing investors plan to pare their holdings through the share sale.

Starwood Capital, Tata Capital Financial Services Ltd, TPG Asia and Mauritius Investors Ltd will collectively offer to sell 42.4 million shares in the Shriram Properties IPO.

Shriram plans to use the proceeds to repay debt, which would include loans availed by its units Shriprop Structures, Global Entropolis and Bengal Shriram.

Note that, Shriram Properties is not the only real estate company looking to go public.

In April, Mumbai-based real estate developer Lodha Developers Ltd had filed its draft prospectus for an IPO, which will see the company raise Rs 37.5 billion in primary capital, and an offer for sale by promoters.

In June, Puranik Builders Ltd, a major real estate developer with projects in Mumbai and Pune, filed the draft prospectus for a Rs 8.1-billion IPO.

With so many IPOs set to hit the markets, we at Equitymaster believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

To know how to safely profit from the ongoing IPO rush, download this FREE report now and discover How to Get Rich with IPOs.

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

Political Instability in the US; India's Air Passenger Traffic & Top Stocks in Action Today

On Monday, the Indian share markets continued their losing streak for the third consecutive session, ending the Christmas-eve by falling nearly 1%. The Sensex ended at 35,470, down 272 points, while Nifty50 index settled at 10,664, down 91 points.

Barring the IT index, all sectoral indices ended in the red, with automobiles, banks, FMCG, energy and metals leading the losses.

Wipro and TCS were the top gainers, while Hero MotoCorp, Bajaj Auto, and JSW Steel lost the most.

Top Stocks in Focus

Board of Directors of the Max India has considered and approved a composite scheme of amalgamation and arrangement amongst Max India, Max Healthcare Institute, Radiant Life Care. The stock will be watched out for today.

Indigo share price will be in focus today as the airline's parent InterGlobe Aviation signed a codeshare and mutual cooperation agreement with Turkish Airlines as part of its international expansion strategy.

Sun Pharmaceutical Industries' wholly owned subsidiary has received approval from US Food and Drug Administration (USFDA) for the New Drug Application (NDA), for Elepsia XR 1000 mg and Elepsia XR 1500 mg.

Meanwhile, Zydus received approvals from the USFDA for Doxycycline Hyclate Delayed-Release Tablets and Febuxostat Tablets. Cadila Healthcare share price will be in focus.

Dr. Reddy's Laboratories has launched Aspirin and Extended-Release Dipyridamole Capsules, a therapeutic equivalent generic version of Aggrenox Capsules in the United States (US) market from the USFDA.

GE Power India share price will hog limelight today as the company bagged electrical and mechanical works contract in Malaysia.

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

By the way, you can read our recently released Q2FY19 result analysis of the following companies: Asian Paints, TVS Motors, Wipro, Ambuja Cement, HDFC Bank, Infosys and more.

Global Stock Market Drivers

Asian stocks were subdued on Monday as investors fretted that political instability in the United States was leaving the country rudderless at a time when the global economy was showing signs of faltering.

Moves were limited by a holiday in Japan while many bourses are set to close early for Christmas.

Donald Trump's budget director and chief of staff on Sunday said the partial US government shutdown could continue into January.

Trump on Sunday said he was replacing Defense Secretary Jim Mattis two months early, a move driven by the president's anger at Mattis' resignation letter and its rebuke of his foreign policy.

Reportedly, Trump has privately discussed the possibility of firing Federal Reserve Chairman Jerome Powell, a move that would likely roil financial markets.

Treasury Secretary Steven Mnuchin felt it necessary to personally call the heads of the six largest US banks to calm nerves and made plans to convene a group of officials known as the "Plunge Protection Team."

The political uncertainty has only added to the air of risk aversion, punishing equities to the benefit of bonds.

Oil Prices Rise

Oil markets rose on Monday on signs that the recent price plunge may start pressing supply from the United States, though concerns about the global economy continued to weigh.

International benchmark Brent crude futures had risen 0.6% to US$54.12 a barrel. US West Texas Intermediate (WTI) crude futures were up 0.3%, at US$45.74 a barrel. They earlier climbed as high as US$46.24.

Crude prices rebounded from sharp declines last week. Brent fell 11% for the week, dropping to its lowest since September 2017 on Friday, while WTI also lost 11% last week, its worst weekly performance since January 2016.

Both benchmarks are down more than 35% from their recent peaks in early October. The price plunge has caused US shale oil producers to curtail drilling plans for next year.

The market remains skeptical over the effectiveness of the curbs by the Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia because of surging American shale production.

While the US is pumping at record levels and inventories are also high, President Donald Trump's trade war with China and the Federal Reserve's rate-hike policy are raising concerns over the health of the global economy.

India's Domestic Air Passenger Traffic Surges

As per Directorate General of Civil Aviation (DGCA)'s latest report, India's domestic air passenger traffic surged by 11% to 11.6 million in November 2018 as compared to 10.5 million in November 2017.

The report also showed that passenger traffic during the January-November 2018 period grew by 19.2%.

Further, passengers carried by domestic airlines during January-November 2018 were 126.2 million as against 105.9 million during the corresponding period of previous year.

The report highlighted that SpiceJet has the highest passenger load factor (PLF) at 91.1% during November 2018. SpiceJet was followed by GoAir with a PLF of 87.6%, AirAsia India at 86.5% and IndiGo at 84.9%.

Speaking of airline sector, India's domestic air traffic has seen a prolific growth of 20-25% during 2015 and 2016. And in 2017, it tapered to 17.4%. However, for the first time, domestic air traffic crossed an important landmark of 100 million passengers during the previous year.

What's foreseeable for India's aviation traffic now is some pressure on the back of the consistent rise in crude oil prices.

Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.

Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.