Sensex Opens Lower Tracking Mixed Global Cues; Tata Motors & Sun Pharma Top Losers

Wed, 27 Jan 09:30 am

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Asian share markets are trading on a mixed note today. All eyes are on the US Federal Reserve policy outcome due later today.

The Nikkei is trading up by 0.2% and the Hang Seng is trading up by 0.1%.

In US markets, Wall Street indices ended in the red overnight with the S&P and Nasdaq slipping from record closing levels as investors digested a batch of corporate earnings results.

Both, the Dow Jones Industrial Average and the Nasdaq Composite ended down by 0.1%.

Back home, Indian share markets have opened on a negative note.

Axis Bank, Hindustan Unilever (HUL), Bank of Baroda, Marico, Emami and India Cements are among 50 companies set to post their December quarter earnings today.

The BSE Sensex is trading down by 265 points. Meanwhile, the NSE Nifty is trading lower by 84 points.

UltraTech Cement is among the top gainers today. IndusInd Bank, on the other hand, is among the top losers today.

Both, the BSE Mid Cap index and the BSE Small Cap index have opened down by 0.6%.

All sectoral indices are trading on a negative note with stocks in the energy sector and automobile sector witnessing most of the selling pressure.

Shares of Century Plyboards hit their 52-week high today.

The rupee is trading at 72.87 against the US$.

Gold prices are trading down by 0.6% at Rs 48,850 per 10 grams.

Speaking of stock markets, note that since the lows in March 2020, the smallcap index has gained more than 100%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.

Despite rallying more than 100% since the March 2020 lows, Richa believes small-cap stocks are set for a massive up move in 2021 and beyond.

Here's what she wrote in a recent edition of Profit Hunter...

• The P/E for smallcap index doesn't make sense. There are thousands of listed small companies. Some have negative earnings. The base is not a valid data to work with.
  
  That said, the closest proxy to relative valuations is the Smallcap to Sensex ratio,
  
  Historically, this ratio has averaged 0.43x. In the previous mega runs of the smallcap index, this ratio has gone as high as 0.75x.
  
  In January 2018, when smallcaps peaked, the ratio was at 0.58x.
  
  Guess where this ratio is now after a 100% run up in the smallcap index?
  
  0.38.
  
  It's lower than the median over 2 decades.

https://www.eqimg.com/profit-hunter/images/2021/01122021-chart-equitymaster.gif

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

In her latest video, Richa talks about how to not miss the 10 best days for your portfolio returns.

Tune in to the video to find out more:

In news from the financial markets, as per an article in The Economic Times, the government is looking to set up a Financial Redressal Agency (FRA) to examine all consumer complaints against regulated financial services providers.

A government official confirmed that deliberations have been held and an announcement could be made in the budget that will be presented on February 1.

India's existing consumer redressal system is fragmented and overseen by sectoral regulators such as the Reserve Bank of India (RBI) for banks and the Insurance Regulatory and Developmental Authority (Irda) for insurance-related grievances.

The government is of the view that this fragmented regulatory architecture leads to inconsistent treatment of both consumer complaints and micro-prudential regulation.

Set up under former pension regulator Dhirendra Swarup, the task force had pointed out in its report that existing consumer complaint redressal forums are not always adequately empowered or equipped to handle all categories of complaints.

In its recommendations, the task force had recommended a two-phase rollout. In the first phase, the FRA would look into complaints regarding the insurance sector and pension sectors that are currently being handled by Irda, the Insurance Ombudsman and the Pension Fund Regulatory and Development Authority (PFRDA).

Once this is stabilised, it would look into complaints against financial service providers regulated by the markets regulator as well as RBI.

How this pans out remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

In news from the economic space, the International Monetary Fund (IMF) has pegged contraction in India's economy at 8% in the current financial year, higher than the 7.7% decline projected by the government's advance estimates.

However, it expects a growth rate of 11.5% in the next financial year before slowing to 6.8% in 2022-23, making India regain the tag of the fastest-growing large economy in the world in both the years.

In the World Economic Outlook released on Tuesday, the IMF said the second-quarter (Q2) gross domestic product numbers for India surprised it on the upside. India's economy fell by 7.5% in the quarter, while most experts had expected the contraction to be in double digits.

IMF was also surprised by the growth numbers for Australia, the euro area, Japan, Korea, New Zealand, Turkey, and the United States for Q2.

The IMF had earlier expected India's GDP to decline by 10.3% in FY21. However, the second-quarter numbers helped it revise the projection.

The IMF projected the global growth contraction for 2020 at 3.5%, 0.9 percentage point less than projected in the previous forecast, reflecting stronger-than-expected momentum in the second half of 2020.

The growth numbers for the next financial year may have implications for the Budget, which will be tabled in Parliament in less than a week.

Speaking of the Budget, in one of his videos for Fast Profits Daily, Vijay Bhambwani talks about the Union Budget 2021.

In the video, Vijay cover the sectors which would basically see the highest amount of expectation, buying and selling momentum.

Which stocks can you expect to move pre- and post-budget?

Tune in to the video to find out more:

Moving on to news from the energy sector, GAIL is among the top buzzing stocks today.

State-owned gas utility GAIL (India) is planning to launch an InvIT of its two gas pipelines between Dahej and Bengaluru ahead of a proposed splitting of the pipeline business from the gas marketing function.

Reportedly, the nation's top gas marketing and transportation firm plans to monetise Dahej-Uran-Panvel-Dabhol pipeline and Dabhol-Bengaluru pipeline by setting up an Infrastructure Investment Trust (InvIT).

InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual or institutional investors in infrastructure to earn a small portion of the income as return.

The InvIT may involve selling 10-20% stake initially. The two pipelines proposed for InvIT had incurred over Rs 30 billion spending.

The move comes ahead of a planned spin-off of GAIL's pipeline business into a 100% subsidiary.

GAIL is India's biggest natural gas marketing and trading firm and owns more than 70% of the country's 16,981-km pipeline network.

Sources said a note for the split will be moved for the consideration of the Cabinet soon. The proposal involves separating the accounts of the pipeline division as well as transferring employees directly connected with the pipeline operations to the new subsidiary.

The government has a 54.89% stake in GAIL (India).

GAIL share price has opened the day down by 3.2%.

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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