Sensex Ends 51 Points Lower; Capital Goods and Energy Stocks Witness Selling

Wed, 8 Jan Closing

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India share markets continued to trade in the red during closing hours and ended their day marginally lower.

At the closing bell, the BSE Sensex stood lower by 51 points (down 0.1%) and the NSE Nifty stood down by 27 points (down 0.2%).

The BSE Mid Cap index ended the day up 0.1%, while the BSE Small Cap index ended up by 0.2%.

Stocks in the capital goods sector and energy sector witnessed selling pressure, while telecom stocks were trading in the green.

The rupee was trading at 71.72 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.83% and the Shanghai Composite was down by 1.22%. The Nikkei 225 was down 1.57%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.15%. The DAX was trading down by 0.37%, while the CAC 40 stood down by 0.26%.

Speaking of Indian share markets, Indian indices have witnessed a starkly polarised situation since 2018, after the uninterrupted bull rally of 2017 entered a period of correction.

While the Sensex recovered from the correction and went on to hitting new life-time highs, the broader markets - predominantly the small and midcap stocks -haven't recovered much.

Ankit Shah has been talking about this trend since a long time. But now, he has even more elaborate data to show you how deep this trend has been.

He pulled out data on 1,638 companies listed on the NSE.

And he shares his observations in a recent edition of The 5 Minute WrapUp...

• Between 29 December 2017 and 30 December 2019, just 246 companies have witnessed gains. Together, these 246 companies added Rs 29.8 trillion worth of market capitalisation.
  
  In other words, 1,392 companies are below the levels they traded at the end of December 2017. Together, these 1,392 companies lost Rs 28.6 trillion worth of market capitalisation.
  
  So, you see the money has literally shifted from one place to another.

Even among the 246 companies that witnessed gains, the major chunk was captured by just a small list of companies.

This can be seen from the chart below...

A Very Small Group of Stocks Captured All the Gains

As you can see, the top 5 companies captured 41% of all the gains in market capitalisation over the last two years. In fact, the top 30 stocks captured more than 80% of the gains.

In short, money has been rushing to safety, into large, liquid, bluechips stocks.

This brings the question: Where can you look for such bluechip stocks?

You can consider the bluechip recommendations made by our Safe Stocks guru, Tanushree Banerjee. She has picked her top 7 stocks for 2020.

Also, as the divergence between the Sensex and Small cap index widens, Richa Agarwal answers why small cap rebound is just around the corner and why this could be the right opportunity to buy quality small cap stocks.

Tune in to find out more...

In the news from the commodity markets, India gold February futures hit a fresh record high today tracking gains in international spot prices which surged past US$ 1,600 an ounce mark. The rise was seen after Iran fired rockets at Iraqi airbase which hosts US forces that triggered risk-off sentiment.

The above attack came hours after the funeral of an Iranian commander whose killing in a US drone strike has raised fears of a wider conflict in the Middle-East.

How the price of yellow metal responds to the upcoming developments remains to be seen. Meanwhile, we will keep you updated on all the news from this space.

Moving on to the news from the banking sector, Yes Bank share price was in focus today after the private sector lender announced it will hold a board meeting on Friday, January 10 to discuss fund raising.

In an exchange filing, Yes Bank said it would discuss and consider raising of funds by issuing equity shares or depository receipts/ convertible bonds/debentures or any other equity-linked securities.

The bank has been in discussions with potential investors to raise funds for a long time.

All this comes at a time when the stock of the bank has been witnessing huge selling pressure.

Last month, rating agencies, India Ratings & Research (Ind-Ra), ICRA, Care Ratings and Crisil had downgraded the rating of various bond issues of YES Bank, citing more than expected delay in raising core equity capital.

The rating agencies said that there is continued uncertainty related to quantum and timelines of raising equity capital, which would keep the bank's capital buffers at low levels and provide lower cushion to absorb any losses on account of higher provisioning requirement due to weakening of asset quality.

We will keep you updated on all the news from the bank's upcoming board meeting. Stay tuned.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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