Sensex Surges 635 Points, Reforms at Indian Railways, and Top Cues in Focus Today

Fri, 10 Jan Pre-Open

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Indian share markets ended their day on a strong note yesterday.

Benchmark indices extended their gains as US President Donald Trump said Iran's missile strikes had not harmed any Americans and that Tehran appeared to be "standing down".

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

At the closing bell yesterday, the BSE Sensex stood higher by 635 points (up 1.6%) and the NSE Nifty closed higher by 191 points (up 1.6%).

The BSE Mid Cap index ended up by 1.5%, while the BSE Small Cap index ended up by 1.6%.

Top Stocks in Focus Today

In the news from the pharma sector, Alembic Pharma share price will be in focus today as the company's joint venture firm, Aleor Dermaceuticals has completed United States Food and Drug Administration (USFDA) inspection at its formulation manufacturing facility located at Karakhadi, Gujarat without any observations.

The inspection was carried out from January 6 to January 8.

Aleor Dermaceuticals is a 60:40 joint venture between Alembic Pharmaceuticals and Orbicular Pharmaceutical Technologies.

From the telecom sector, MTNL share price will also be in focus today after the company said that it has received shareholders' approval for raising up to Rs 65 billion through issuance of non-convertible debentures as well as for monetisation of land and buildings.

Indian Railways to Engage with Private Operators

In consultation with the NITI Aayog, the government's policy think-tank, the railway ministry has picked 100 routes to run 150 private passenger trains. As per the news, the bids for the routes are likely to be invited soon.

The 100 routes have been split into 10-12 clusters. According to the plan, the private operator will have the right to collect market-linked fares and will be provided flexibility of class composition and halts. They will also be able to use the rail infrastructure on payment of haulage charges.

According to a recent Economic Times report, the finance ministry's Public Private Partnership Appraisal Committee had given an in-principle nod to the proposal last month, paving the way for the railways to roll out its reform in engaging private operators and ending its long monopoly in running passenger trains.

We think the above development is a step in the right direction.

Here's what Tanushree Banerjee wrote about this in a recent edition of The 5 Minute WrapUp...

• Investment in Indian railways has always been lacking in the past. This has meant a stretched infrastructure with more than 60% of routes being over utilised.
  
  The poor image of Indian railways meant a price hike was never an option for the government.
  
  All this has changed in the recent years.
  
  Since 2014, investment in the Indian railways has increased at a rapid pace.

The government's aim to modernise more than 100 stations to world class standards and by provide amenities like wi-fi, quality food and beverage services will improve passenger experience.

Improved services will also help the government justify fare increases in the future.

Tanushree believes such reforms are the need of the hour for the Indian economy.

In one of her recent articles, she wrote about a safe stock for the next decade.

It's the StockSelect recommendation for this month and Tanushree believes it can be one of the best performers in the next decade.

If you've subscribed to StockSelect, here's the link to the report.

If you're aren't a member, sign up for StockSelect here.

Maruti Suzuki's Production in December

Maruti Suzuki announced that its total production rose 7.9% to 1.2 lakh units in December 2019 from 1.1 lakh units in December 2018.

Sequentially, production declined 18.3% in December 2019 from 1.4 lakh units in November 2019.

The company witnessed reduced output for nine straight months from February to October 2019 due to lower demand before raising output in November 2019.

The car major reported 11.5% decline in total auto sales to 1.3 lakh units in December 2019 compared with 1.5 lakh units in November 2018. Total sales, however, rose 3.9% last month compared with 1.3 lakh units in December 2018.

The firm hiked prices across various models from January 2020. The car major said that the cost of vehicles has been impacted adversely due to increase in various input costs. This price increase shall vary for different models.

Notably, auto sector is the biggest victim of economic slowdown. However, instead of turning away from the sector investors should start looking out for good investing opportunities now.

The BSE Auto index has entered the greed phase and will stay there for 32 months. There is a big money-making opportunity out there.

Watch this below video where Apurva Sheth explains it all to you...

Sunteck Realty Enters MoU with SBI

From the realty sector, Sunteck Realty share price will be in focus today as the real estate developer entered into a memorandum of understanding (MoU) with State Bank of India (SBI) to safeguard home buyers financially under Residential Builder Finance with Buyer Guarantee programme.

Under the scheme, SBI will issue guarantee for completion of projects to customers availing SBI Home Loans.

The programme focuses on house segments with home price of up to Rs 25 million in seven Indian geographies.

Under the MoU, the state lender would refund the buyer's amount invested in an under-construction project if the builder fails to handover the occupancy certificate within the agreed time period.

This time-period cut-off is based on the timeline submitted to RERA (Real Estate Regulation and Development Authority), making it an additional cover over and above RERA.

Speaking of real estate sector, note that this is one sector that has tested investor patience over the years. While the sector has seen big moves in the last few years, the downward movement has been equally sharp.

The post demonetisation era has been tough on the sector. Excess inventory, i.e. housing projects stuck for years, has meant homeowners have largely stayed away from any fresh buying in the real estate space.

Also, post the IL&FS crisis, lending to real estate developers has largely dried up. The BSE Realty Index also reflects the same. It was down 31% in 2018.

But is the scenario about to change?

The government recently announced a Rs 250 billion package to bailout stalled housing projects. It's a much-needed relief for homeowners.

The government plans to revive over 1,600 stalled housing projects covering 4.6 lakh units.

Announcing the decision, Finance Minister Nirmala Sitharaman had said the government will put in Rs 100 billion in this alternative investment fund (AIF) while SBI and LIC would provide Rs 150 billion, taking the total size to Rs 250 billion.

The BSE Realty Index has seen a sharp bounce post this announcement.

Is the Real Estate Sector Set for a Turnaround?

What would be more interesting is the pickup in consumption once the real estate sector revives.

Once people get their homes, they are likely to spend on tiles, paints, furniture, electronics, pipes, cables, cement, and many other things.

We will keep you updated on how this trend pans out.

Watch this space for more!

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

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