Sensex Opens Flat; Banking and Power Stocks Lag

Fri, 17 Jan 09:30 am

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.3% while the Hang Seng is flat. The Nikkei 225 is trading up by 0.5%. Meanwhile, the S&P 500 rallied through the 3,300 mark for the first time on Thursday and the other main US indices also surged to record highs, fueled by tech stocks, solid retail sales data and upbeat quarterly earnings from Morgan Stanley.

Back home, India share markets opened flat. The BSE Sensex is trading up by 2 points while the NSE Nifty is trading down by 7 points. The BSE Mid Cap index is trading down by 0.2% and BSE Small Cap index opened up by 0.2%.

Sectoral indices have opened the day on a mixed note with telecom stocks and energy stocks witnessing buying interest. Power stocks and banking stocks are trading in the red.

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, the editor of daily premium newsletter Equitymaster Insider (requires subscription), 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.

Moving on, the rupee is currently trading at 70.99 against the US$.

The rupee pared early gains and settled lower by 11 paise at 70.93 against the US dollar on Thursday amid steady rise in crude oil prices and dollar demand from importers.

At the interbank foreign exchange market, the domestic currency opened on a strong note at 70.80 a dollar. But during the day it lost momentum and touched a low of 70.98 against the American currency.

The rupee finally settled the day at 70.93, showing a fall of 11 paise over its previous close.

Reportedly, the rupee pared its early gains despite the US-China signing the phase-1 trade deal, as huge uncertainty still remains, which might make it difficult for China and the US to reach a comprehensive trade deal.

Speaking of currencies, Vijay Bhambwani, editor of Weekly Cash Alerts, tells you the main reasons why not to trade commodities and currencies the same way you would trade equities. Here's an excerpt of what he wrote...

• Currencies are traded in pairs and the most liquid is the USDINR. Currencies are traded in four decimal points just as bonds are. The international derivative trader's association has indicated that forex may be traded in 6 decimals in the coming few years.
  
  It takes months sometimes for the currency pair to pass the next round figure, say from 70 to 71.
  
  Can you really trade commodities and currencies alike or for that matter, equities and currencies alike? Definitely not!

To know more, you can read Vijay's entire article here: Is Trading in Equities, Commodities, and Currencies the Same?

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Drug controller general of India approved Wockhardt's new antibiotic EMROK in intravenous (IV) and oral dosage forms.

This antibiotic will be used to treat superbug infections.

Reportedly, the Indian drug regulator's approval for EMROK oral and IV dosages is the first for an Indian company.

The company expects the new drugs to become the first choice of treatment for superbug infections in hospitals and achieve cumulative annual sales of Rs 1 billion in the next 18-24 months.

The total size of the antibiotic market is Rs 160 billion in terms of annual sales, and accounts for around 12% of the Indian pharmaceutical market.

Approval for the drug is significant because anti-microbial resistance (AMR), a term used for bacteria developing resistance to antibiotics, is one of the major health problems globally.

As per the report, India carries one of the largest burdens of drug-resistant pathogens in the world. About 2 million deaths are projected to occur in India due to AMR by the year 2050.

Wockhardt share price opened the day up by 1.3%.

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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