Sensex Ends 355 Points Lower; Telecom and Realty Stocks Witness Selling

India share markets continued their downtrend and ended their trading session on a negative note.

At the closing bell, the BSE Sensex stood lower by 355 points (down 0.9%) and the NSE Nifty closed down by 103 points (down 0.9%). The BSE Mid Cap index ended the day down 1.1%, while the BSE Small Cap index ended the day down 1.2%.

Sectoral indices ended in the red with stocks in the realty sector and telecom sector witnessing most of the selling pressure.

The rupee was trading at 68.84 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 2% and the Shanghai Composite was down by 1.9%. The Nikkei 225 was down 3%.

European markets were trading on a mixed note. The FTSE 100 was down by 0.2%. The DAX was trading up by 0.1%, while the CAC 40 was down by 0.1%.

In the news from commodity space, crude oil was witnessing selling pressure today.

Losses were seen on the back of concerns of a sharp economic slowdown outweighed supply disruptions from the Organization of the Petroleum Exporting Countries' (OPEC) production cutbacks and US sanctions on Iran and Venezuela.

Note that crude oil prices were near 2019 highs last week, supported by supply cuts led by producer club OPEC. Reportedly, US sanctions against oil producers Iran and Venezuela are boosting prices.

Last week, the OPEC scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled.

The OPEC and non-affiliated allies like Russia - known as the OPEC+ alliance - have been withholding around 1.2 million barrels per day (bpd) in crude supply from the start of the year to tighten markets and prop up prices.

US crude oil output has soared by more than 2 million barrels per day (bpd) since early 2018, to around 12 million bpd, making America the world's biggest producer ahead of Russia and Saudi Arabia.

On the demand-side, there is concern that an economic slowdown as well as improving energy efficiency and the emergence of alternative transport fuels will erode oil consumption.

In the news from the IT space, Tech Mahindra share price was in focus today. The stock of the company witnessed buying interest today after its Rs 19.5-billion buyback offer opened for subscription today. The subscription will close on April 5. The tech major plans to buy back 20.58 million shares at Rs 950 a share.

Speaking of buybacks, at Equitymaster, we believe, as a shareholder in cash rich companies, you should not only be wary of expensive buybacks. But if possible use it to your advantage to rake in some cash.

As per Rahul Shah, co-head of Research, investors should not assume buybacks are always good. Here's an excerpt of what he wrote in one of the editions of The 5 Minute Wrapup:

  • The reason behind the buyback must be investigated. At the end of the day, an increase in earnings should be more a function of the inherent robustness of the business, as that's what will help it continue to grow at a healthy pace.

The topic also brings us to ask: Do buy-backs offer an arbitrage opportunity for retail investors? Ankit Shah has answered this question in one of the editions of Equitymaster Insider. You can access the issue here (requires subscription).

In the news from the currency space, the Indian rupee witnessed selling pressure today. It slipped more than 20 paise in the morning trade today. This was seen after a loss of 12 paise against the US dollar on Friday.

The domestic currency, however, still remains the best performing emerging market currency over last one month gaining over 3%.

Asia's worst-performing currency took five weeks to become its best last week.

The turnaround was fueled by the improved chances of Prime Minister Narendra Modi winning a second term amid recent tensions between India and Pakistan.

The optimism has led to local shares and debt luring robust flows, which have turned the carry-trade returns on the rupee to the highest in the world in the past month.

The rupee came under pressure last week due to rising crude pressure and a caution ahead of the outcome of the Federal Open Market Committee (FOMC) meeting.

Losses for the rupee today were also seen on account of some buying in American currency by banks and importers.

Note that the US$ is witnessing buying despite the Fed's decision to take a pause in raising rates last week.

Now speaking of Fed rate policy impact on India, how has the Fed rate hike impacted Indian stock markets in the past?

The past decade has seen Fed rates at historical lows, but it wasn't always the case.

The period from 2003-2006 saw Fed rates increase from 1% to 5.25%.

How did the Indian stock market fare during this time?

Do US Interest Rate Hikes Impact Indian Markets?

Well, if you are a long-term investor, you have nothing to worry about.

The Sensex went up by almost 3 times from 3,500 to more than 10,000 during the same period.

The rise was supported by strong earnings growth during the same period.

It further emphasizes the importance of fundamentals in the long run.

Look out for quality stocks with a history of strong earnings growth and sound fundamentals.

The noise surrounding the decisions of the US Fed might just present the right opportunity for you to buy safe stocks.

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

Indian Indices Fall Amid Global Selloff; Sensex Down Over 400 Points
12:30 pm

Share markets in India are presently trading on a negative note. Barring oil & gas sector, all sectoral indices are trading in red with realty stocks, metal stocks and banking stocks witnessing maximum selling pressure.

The BSE Sensex is trading down by 422 points (down 1.1%), while the NSE Nifty is trading down by 115 points (down 1%). The BSE Mid Cap index is trading down by 0.9% and the BSE Small Cap index is trading down by 1.1%.

Speaking of Indian share markets, note that the recent surge can be attributed to the strong foreign investor inflows into Indian equities.

Have a look at the chart below that reveals the monthly trend in foreign investor flows into Indian equities over the last five years.

Are Foreign Investors Coming Back to Indian Equities?

Over the last five years, foreign investors were net sellers in 24 months. Effectively, foreign investors were net sellers 40% of the time.

Here's what Ankit Shah wrote about it in today's edition of The 5 Minute WrapUp...

  • After net outflows in the month of January 2019, foreign investors flows have shown a strong reversal since last month.

    In February 2019, foreign investors were net buyers of Rs 15,328 crore worth of Indian equities.

    The inflows have picked up further pace in March. As on 20 March 2019, foreign investors have already pumped in Rs 26,560 crore in Indian equities.

    The chart shows that the highest monthly net foreign investor inflow over the last five years was recorded in March 2017 at Rs 33,782 crore.

He believes, if the money keeps pouring in for the rest of the month, the current month may break that record.

The rupee is trading at Rs 69.01 against the US$.

The domestic currency opened 12 paise down at 69.07 against the dollar on account of some buying in American currency by banks and importers. The US$ rose despite the Fed's decision to take a pause in raising rates.

After rising to the highest level in seven months following sustained fund inflows by the foreign institutional investors, the rupee came under pressure on Friday after the greenback strengthened against its major crosses.

In the news from the pharma space, Dr Reddy's share price is in focus today. USFDA has completed audit of R&D facility of Aurigene Discovery Technologies, a wholly owned subsidiary of Dr. Reddy's Laboratories, situated at Hyderabad. No FDA 483 was issued at the end of inspection.

To know more about the company, you can read Dr Reddy's latest Result Analysis on our website.

Moving on to the news from the aviation space, Jet Airways share price is witnessing buying interest today after it was reported that founder and principal promoters Naresh Goyal and his wife, Anita Goyal would step down from the board today.

Shares of the company are trading 4% higher on back of the above news.

As per an article in The Economic Times, the debt-laden airline's lenders' consortium may invoke the entire 51% stake of Naresh Goyal in the airline and start looking for a new buyer in the weeks to come.

Here's an excerpt from the article:

  • The current CEO Vinay Dube is expected to stay on and steer Jet out of the current crisis.

    Former SBI managing director and a former Jet Airways board member Srinivasan Vishvanathan may be invited to join the airline's top leadership. Vishvanathan was on Jet's board as an Independent Director till August 2018 for nearly three years.

Reportedly, this development occurred after Etihad expressed its desire to exit the airline by formally asking State Bank of India (SBI) to purchase its stake in the airline.

In 2013, Jet Airways survived a similar crisis when Abu Dhabi's Etihad Airways injected US$600 million of capital for a 24% stake in the airline, three London Heathrow slots and a majority share in Jet's frequent flyer programme. The infusion helped Jet pare down debt and fight growing domestic competition.

With more than US$1 billion of debt, Jet is struggling to stay afloat. It has delayed payments to banks, suppliers, pilots and lessors - some of which have forced the airline to ground as many as 40 planes.

How this pans out going forward 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.

Sensex Opens Over 300 Points Down; Realty and Metal Stocks Drag
09:30 am

Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 1% while the Hang Seng is down 1.7%. The Nikkei 225 is trading down by 3.2%. Wall Street stocks sold off sharply on Friday, with all three major US stock indices posting their biggest one-day percentage declines since 3 January, as weak factory data from the United States and Europe led to an inversion of US Treasury yields.

Back home, India share markets opened on a negative note. The BSE Sensex is trading down by 343 points while the NSE Nifty is trading down by 96 points. The BSE Mid Cap index opened down by 0.3% while BSE Small Cap index opened down by 0.1%.

Barring power stocks, all the sectoral indices have opened the day in red with realty stocks and metal stocks leading the losers.

The rupee is currently trading at 69.12 against the US$.

Speaking of Indian share markets in general, how do things look on the valuations front?

The Sensex price to earnings ratio has moved over the last five years. It has mostly been in a rising trend, except some intermittent declines.

But the Sensex tells a very a selective, skewed story of just the 30 largest companies.

So, it would be worth seeing the valuation trend of a much broader index.

Ankit Shah just did that and picked the NSE 500 for his latest study.

What he found was the NSE 500 index was trading cheap before the BJP came to power at the Centre in 2014. Since then, the price to earnings ratio of the index has been trending higher, like the Sensex.

It is interesting to note that the NSE 500 index has almost doubled between February 2014 and now. The price to earnings multiple of the index has gone up almost 70% during the same period, as can be seen from the chart below.

Market Valuations - 2014 to 2019

What does all of this mean?

Here's what Ankit wrote about it in today's edition of The 5 Minute WrapUp...

  • What this means is that the gains have mostly come from valuation multiple expansion and only about 30% from earnings growth.

    While the NSE 500 P/E ratio is down 12% from its August 2018 high of 34.5, it's still quite on the higher side.

    As such, I believe the key to the next bull run would be a good growth in earnings of listed Indian companies.

Whether this growth comes in, and how, remains to be seen. We will keep you updated on developments from this space.

In the news from the economy. Finance Minister Arun Jaitley said that the government had exceeded its disinvestment target of Rs 800 billion for 2018-19 by Rs 50 billion, taking the proceeds to Rs 850 billion.

The Department of Investment and Public Asset Management (DIPAM) has crossed the disinvestment target for the second year in a row.

On Friday, Power Finance Corp completed the acquisition of the government's 52.6% stake in Rural Electrification Corp for Rs 145 billion. The fifth tranche of the Central Public Sector Enterprise Exchange Traded Fund (CPSE ETF) also closed on Friday, clocking in Rs 95 billion.

This translated to Rs 240 billion worth of transactions realised in a day.

In 2017-18, DIPAM had raised Rs 1 trillion compared to a budgeted target of Rs 725 billion. The bulk of that was realised from ONGC's acquisition of Hindustan Petroleum.

The target for 2019-20 stands at Rs 900 billion.

As of February 28, the Centre had garnered Rs 564.7 billion. Before Friday's receipts of Rs 240 billion, DIPAM had, in March, garnered Rs 10 billion from the strategic sale of Dredging Corp to a consortium of four ports and Rs 20 billion from the sale of enemy shares.

The government has also completed two initial public offerings (IPOs) of Mazagon Docks and MSTC this month.

For the fiscal year, DIPAM heavily depended on its marquee ETFs, CPSE and Bharat 22. While Rs 187.3 billion has been garnered from two fund offerings of the Bharat 22 ETF this fiscal, Rs 265 billion has come in from the CPSE ETF, including the latest offering.

Besides, firms like ONGC, Oil India, BHEL, Nalco and other PSUs have carried out buybacks, which have resulted in disinvestment revenue of about Rs 100 billion. Other smaller acquisitions have also taken place.

These include NBCC's purchase of HSCC, and WAPCOS' acquisition of NPCC. Some other IPOs this year include IRCON, RITES, Garden Reach Shipbuilders, and Mishra Dhatu Nigam. The big 'offer for sale' was for a 3% stake in Coal India, worth Rs 52.2 billion.

Moving on to other news. As per an article in a leading financial daily, India's foreign exchange (forex) reserves increased by US$3.6 billion during the week ended 15 March.

According to the Reserve Bank of India's (RBI) weekly statistical supplement, the overall forex reserves rose to US$405.6 billion from US$402 billion reported for the week ended 8 March.

India's forex reserves comprise Foreign Currency Assets (FCAs), gold reserves, Special Drawing Rights (SDRs) and India's reserve position with the International Monetary Fund (IMF).

On a weekly basis, FCAs, the largest component of the forex reserves, edged higher by US$3.5 billion to $377.8 billion.

Besides the US dollar, FCAs consist of 20-30% of the other major global currencies.

The RBI's weekly data showed that the value of the country's gold reserves rose by US$38.9 million at $23.4 billion.

The SDR value inched up by US$5.9 million to US$1.46 billion, while the country's reserve position with the IMF grew by US$12.1 million to US$2.99 billion.

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

Air Passenger Traffic Growth, US China Trade Talks and Top Stocks in Action Today

The Indian share markets ended lower but off day's low on Friday with Nifty finishing below 11,500 level.

At close, the Sensex was down 222 points, while Nifty was down 64 points.

Among sectoral indices, every Nifty index except Nifty Realty were trading in the red with losses ranging from 0.2% to 1.3%.

Top Stocks in Focus

Cadila Healthcare share price will be in focus today as the US Food and Drug Administration (USFDA) has successfully completed an inspection at Cadila Healthcare's Pharmaceutical Technology Centre (PTC) located at Ahmedabad. At the end of the inspection, no observations (483) have been issued.

Meanwhile, Caplin Point Laboratories wholly owned subsidiary, Caplin Steriles has been granted final approval by the USFDA for its Abbreviated New Drug Application (ANDA) Glycopyrrolate injection.

Lupin has launched Levothyroxine Sodium Tablets USP, having received an approval from the USFDA earlier.

Vodafone Idea has lost 35.9 lakh customers in January 2019. Following this, the company's total customer base has decreased to 415 million with market share of 35.1%.

Jet Airways has reported the Passenger Load Factor (PLF) of 89.4% during the month of February 2019. The company had reported the Passenger Load Factor of 86.1% during the month of January 2019.

SpiceJet has reported the Passenger Load Factor (PLF) of 94% during the month of February 2019. The company had reported PLF of 90.9% during the month of January 2019.

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

Domestic Air Passenger Traffic Growth Slows

The domestic air passenger volume rose at slower growth of 5.6% in the month of February 2019 as against 24.1% in February 2018.

According to the Directorate General of Civil Aviation (DGCA) data, domestic airlines flew 113.5 lakh passengers in February 2019, as against 107.4 lakh passengers carried in the same month of last year.

As per the report, the domestic air passenger count increased 7.4% during the period of January- February 2019.

Indian carriers carried 238.6 lakh passengers during January- February 2019 as against 222.1 lakh during the corresponding period of previous year.

Further, in terms of passenger load factor (PLF), SpiceJet reported 94.0% PLF during the month of February 2019, followed by Go Air (92.6%), Air Asia (91.8%) and Jet Airways (89.4%). The passenger load factor in the month of February has shown increasing trend primarily due to airlines offering promotional fares resulting in increased demand.

Global Stock Market Drivers

European stocks and US equity futures turned lower on Friday and the euro slumped after miserable data from the German manufacturing sector fueled worries about global growth.

The yield on benchmark Treasuries fell back to a more than one-year low.

In Asia, a late-day turnaround put most benchmark stock indices back into the green, from Japan to Korea and Australia.

Mild optimism that the Federal Reserve's dovish tilt can prolong the bull market for equities helped push the MSCI index of global equities up to its highest level since early October this week.

Bonds, however, are signaling worries that momentum in growth and inflation remains subdued.

Trade talks between the US and China are scheduled to continue this week.

Elsewhere, sterling was steady after European leaders moved to stop a chaotic no-deal Brexit from happening next week, handing the UK an extra two weeks. The UK now needs to decide by April 12 what it will do next.

Oil Prices

Oil hovered slightly below 2019 peaks on Friday, propped up by ongoing supply cuts led by producer club OPEC and by US sanctions on Iran and Venezuela.

Concerns that an economic slowdown might soon impact fuel consumption are preventing crude prices from rising further, the reports noted.

Brent crude oil futures were at US$67.90 per barrel, 4 cents above their last close. Brent hit a four-month high of US$68.69 per barrel the day before.

US West Texas Intermediate (WTI) futures were at US$59.96 per barrel, down 2 cents from their last settlement. WTI also marked a 2019 peak the previous day, at US$60.39.