Sensex Opens Lower; Metal and Telecom Stocks Under Pressure

Mon, 27 Jan 09:30 am

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Asian stock markets slid today as investors shunned equities on growing concerns over the scope of a China virus outbreak, with safe-haven assets such as the Japanese yen and Treasury notes in greater demand. Wall Street fell in a broad sell-off on Friday, as investors fled equities on growing concerns over the scope of the coronavirus outbreak, capping the S&P 500's worst week in six months.

Back home, India share markets opened on a negative note. The BSE Sensex is trading down by 175 points while the NSE Nifty is trading down by 59 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.3% and 0.1% respectively.

Sectoral indices have opened the day on a negative note with metal stocks and telecom stocks witnessing maximum selling pressure. Consumer durables stocks and realty stocks have opened the day in green.

The rupee is currently trading at 71.45 against the US$.

In the news from the economy. According to the latest data from the RBI, the country's foreign exchange reserves rose US$ 943 million to touch a life-time high of US$ 462.2 billion in the week ended January 17.

In the previous week, the reserves had increased by US$ 58 million to US$ 461.2 billion.

In the reporting week, the rise in reserves was mainly on account of an increase in foreign currency assets, a major component of the overall reserves, which rose by US$ 867 million to US$ 428.5 billion.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. In the reporting week, gold reserves increased US$ 70 million to USD 28.6 billion.

The special drawing rights with the International Monetary Fund (IMF) were up by US$ 3 million to US$ 1.5 billion. The country's reserve position with the IMF rose by US$ 3 million to US$ 3.7 billion, the data showed.

In another development, foreign portfolio investors (FPI) have infused a net sum of Rs 16.2 billion into the Indian capital markets in January so far, buoyed by the signing of the first phase of the US-China trade deal.

As per latest depositories data, FPIs invested a net Rs 133 billion in equities and withdrew a net Rs 116.8 billion from the debt segment between January 1-24. This translates into a total net inflow of Rs 16.2 billion.

The Reserve Bank of India on Thursday raised the investment limit for FPIs in government and corporate bonds, a move that is likely to bring in more foreign funds in the country.

According to the current norms, short-term investments by an FPI should not exceed 20% of the total investment of that FPI in either central government securities (including treasury bills) or state development loans.

The same norms are applicable on investments in corporate bonds. The short-term investment limit has now been increased from 20% to 30% in both the cases.

Going forward, all eyes will now be on the upcoming Budget to get further cues. This will play major role in terms of shaping up the investment views of foreign investors and decision to invest in the Indian equity markets.

Speaking of budget, in the video below, Tanushree Banerjee tells how you should react to the biggest economic event of the year - the Union Budget which is going to be announced this week.

Tune in now...

Meanwhile, FPIs would continue to be watchful of the domestic environment and tread cautiously. We will keep you updated on the developments from this space.

Note that, in March last year, the Morgan Stanley Capital International (MSCI) announced it would increase the weightage of Chinese A shares (stocks trading in mainland China) by 4 times. These shares form around 10% of total Chinese shares in the index.

FPIs investing in passive funds follow the MSCI EM index for investments in emerging markets.

A comparison of India's weightage with China in the MSCI EM index provides us clues on the recent outflows from FPIs.

It also explains the announcement to reduce promoter shareholding in the budget.

Will India be the Next Hot FPI Destination?

Will we see a similar FPI inflow into Indian stocks?

Looking at the recent inflow into the Chinese stock markets, it seems very likely.

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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