Sensex Opens Marginally Lower; Metal & Banking Stocks Drag

Wed, 15 Jan 09:30 am

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Asian share markets are lower today as investors await the signing of an initial US-China trade deal, with sentiment somewhat dented by comments from the US Treasury Secretary that tariffs would remain in place for now.

The Shanghai Composite is down by 0.6%, while the Hang Seng is down 0.8%. The Nikkei 225 is trading down by 0.4%.

Back home, India share markets have opened the day on a negative note. The BSE Sensex is trading down by 125 points while the NSE Nifty is trading down by 56 points.

The <>BSE MidCap index and the <>BSE SmallCap index have opened the day on a flat note.

Sectoral indices have opened the day on a mixed note with stocks in the realty sector and energy sector witnessing buying interest, while metal stocks and banking stocks are trading in red.

Speaking of Indian stock markets, as the new year has kickstarted, there is hardly any cheer among investors despite Sensex touching new highs.

The reason: The rally is driven by a few large caps and has left most of the stocks untouched. The blow was specially felt by small caps, most of which remained untouchables.

This isn't the first time smallcaps are witnessing correction. And yet, this was once in a decade kind of event.

That's because it was for the first time that the smallcaps remained in the red in two successive years.

The Divergence between Smallcap and Sensex

Here's what our smallcap research analyst Richa Agarwal wrote about it in of the edition of the Profit Hunter:

• "The mutual fund reclassification, liquidity squeeze, global trade tensions and recent reforms and policy changes kept investors on guard and away from smallcaps. It did not help that the economy growth itself slowed down to six-year low.
  
  But amid all this macro data, a few interesting details are missing.
  
  Ignoring these could deprive you of possibly the best money-making opportunity in 2020."

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 smallcap stocks.

Watch now...

In news from the IT sector, Wipro on Tuesday reported 3.2% year-on-year (YoY) drop in consolidated profit for the December quarter, and forecasted a modest revenue growth in the quarter ending March 31.

The company posted a profit of Rs 24.6 billion for Q3FY20.

Wipro's total revenue increased 2.7% to Rs 154.7 billion during the quarter compared with 150.6 billion in the same period last year.

In its IT services business, the company reported revenues of US$ 2,094.8 million on a constant currency basis, a growth of 1.8% on a quarter-on-quarter basis and 3.3% year on year.

IT services operating margin for the quarter improved to 18.4%.

The company said that it expects revenue from IT services business to be in the range of US$ 2,095 million to US$ 2,137 million in the fourth quarter of current financial year.

Wipro share price has opened the day down by 2.1%.

To know more about the company, you can read Wipro's Q3FY20 result analysis on our website.

Moving on to news from the pharma sector, Glenmark Pharma is planning to raise up to US$ 200 million through dollar-denominated bonds to refinance debt.

As per reports, the drug maker will conduct investor road shows from 14 to 19 January across Asia, Europe and West Asia.

Proceeds from the bond sale will be used to refinance existing debt raised through dollar bonds in 2016. The earlier dollar notes, priced at 4.5% coupon rate, have a bi-annual payment schedule and mature in 2021.

In September 2018, Glenmark had refinanced part of its debt raised via foreign currency convertible bond, due to mature in 2022, through a US$ 90.8 million dollar-denominated bank loan.

Half of Glenmark's borrowings comprise capital market instruments, of which dollar bonds formed nearly 31%. The other half came from bank loans, mostly dollar-denominated bank loans.

Glenmark Pharma share price is presently trading down by 0.8%.

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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