Indian Share Markets Trade Lower with Energy Stocks Under Pressure; Infosys, ONGC Top Losers

Thu, 20 Jan 10:30 am

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Asian stock markets gained ground after a mixed opening today, with some support from bargain-hunting purchases.

The Nikkei is up 1.1% while the Hang Seng has zoomed 2.4%. The Shanghai Composite is up 0.3%.

In US stock markets, Wall Street indices ended sharply lower on Wednesday following a diverse set of corporate earnings and as investors continued to worry about higher US Treasury yields and the Federal Reserve tightening monetary policy.

The Dow Jones dropped 1% while the Nasdaq plunged 1.2%. Even the S&P 500 fell 1%.

Back home, Indian share markets opened on a negative note following the trend on SGX Nifty and tracking mixed global cues.

There's a strong line-up of companies reporting their December quarter results today. These companies include Hindustan Unilever (HUL), Asian Paints, Bajaj Finserv, Havells, Bajaj Holdings, Mphasis, and Biocon, among others.

The BSE Sensex is trading down by 281 points. Meanwhile, the NSE Nifty is trading lower by 72 points.

Power Grid and UltraTech Cement are among the top gainers today. Infosys, on the other hand, is among the top losers today.

The BSE Mid Cap index is flat. The BSE Small Cap index is trading higher by 0.3%.

Sectoral indices are trading mixed with stocks in the power sector and FMCG sector witnessing buying interest.

Energy stocks and IT stocks, on the other hand, are trading in red.

Shares of Tata Elxsi and Balrampur Chini hit their 52-week highs today.

The rupee is trading at 74.42 against the US$.

Gold prices are trading down by 0.1% at Rs 48,350 per 10 grams.

Meanwhile, silver prices are trading up by 0.1% at Rs 64,486 per kg.

Crude oil prices slipped after hitting their highest levels since 2014 in the previous session on the back of strong demand and short-term supply disruptions, underlying factors that limited losses as investors took profits.

Speaking of the current stock market scenario, amid the ongoing volatility, have a look at the two charts below, in the order they have been placed:

Near Term Volatility in Sensex Compensated by Long Term Gains

The year-on-year change in the Sensex was hardly predictable but someone who stayed invested multiplied every lakh nearly 14 times.

Timing the markets could be suicidal as valuations and volatility put the markets in a see-saw mode.

As an individual investor, you need to sit tight over high conviction stocks and invest consistently to see the magic of compounding.

Because 2022 could be extremely profitable, over time, provided you reset your portfolio with the right kind of safe assets and safe stocks.

In news from the energy sector, JSW Energy is among the top buzzing stocks today.

JSW Energy on Wednesday reported a 162% jump in its net profit for the third quarter at Rs 3.2 bn on the back of higher revenues. The same figure stood at Rs 1.2 bn in the corresponding quarter a year ago.

The company's total revenue increased by 20% to Rs 19.8 bn from Rs 16.6 bn. The company witnessed an increase in short-term sales and realisation in the quarter under review.

JSW managed to reduce receivables from power distribution companies year-on-year (YoY) by 20%.

While the results were good, they were not the only highlight. JSW Energy's joint managing director and chief executive officer Prashant Jain said it will soon announce its first green hydrogen project.

On the results front, he said,

• We could increase our short-term sales in October and we made the highest EBIDTA in any quarter in the last five years. Our O&M costs have been under control and our interest costs have been lower because we have been consistently deleveraging our balance sheet.

Ahead of the Union Budget and the polls season, Jain said electricity should be brought under GST and states announcing power tariffs concessions should make direct subsidy payments to target consumers.

Note that the company is banking heavily on renewable energy. It targets to reach 20 GW of power generation capacity by 2030, with about 85% of this capacity via renewable energy.

For more focus on renewables, the company's board approved re-organisation of its renewable and thermal businesses in November last year. All the existing and upcoming renewable energy businesses will be housed under JSW Energy Neo, a wholly owned subsidiary of the company.

Further, the company in July last year announced entering into a framework agreement with Australian Fortescue Future Industries to collaborate on green hydrogen production.

Note that the term 'green hydrogen' has emerged as the newest buzzword around the block. Companies are focusing more on this new theme. PSU and big corporates are investing big bucks to build green hydrogen plants across India.

Given the vast range of applications of this fuel, green hydrogen is poised to gradually dominate energy supply systems. And JSW Energy stands to benefit from this.

Speaking of green hydrogen, in December last year, Co-head of Research at Equitymaster recorded a video discussing how India has a chance to innovate and cash in on the latent demand for green hydrogen.

Tune in to the below video to know more:

Moving on to news from the automobile sector, shares of Bajaj Auto are in focus today, a day after the company reported a sharp decline in its net profit.

Bajaj Auto saw its net profit in the December quarter decline 22% as domestic sales was in slow gear and higher input costs weighed on the margins.

The automaker also had nothing great to show on the revenue front as revenues grew a mere 3% to Rs 90.2 bn. This, despite a 10% decline in sales volume due to price hikes over the past one year.

Revenue per unit grew by 14% to Rs 76,370 primarily due to price hikes and to a lesser extent, due to improved sales mix.

The company said that a strong performance in the overseas market and steep recovery in the three-wheeler business will help the company deliver improved performance in the coming quarter.

Commenting on the performance, Rakesh Sharma, ED, Bajaj Auto said given the market environment, the company has performed well in both exports market and the domestic motorcycle market.

He added that Bajaj Auto ended the calendar year with 2.5 m units of exports and expects the record number for the entire fiscal year as well.

While domestic two-wheeler sales were weak, a much-needed recovery in three-wheeler sales helped support the company's financial performance during the quarter.

Bajaj Auto share price is currently trading down by 0.9%.

To know more, check out Bajaj Auto's 2020-21 annual report analysis.

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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Indian Share Market Update: Top Gainers and Losers