Sensex Trades Over 500 Points Lower; Dow Futures Down by 77 Points

Wed, 27 Jan 12:30 pm

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Share markets in India are presently trading on a negative note.

The BSE Sensex is trading down by 553 points, down 1.1% at 47,794 levels.

Meanwhile, the NSE Nifty is trading down by 150 points.

Wipro and Tech Mahindra are among the top gainers today. Axis Bank and Tata Motors are among the top losers today.

The BSE Mid Cap index is trading down by 0.5%.

The BSE Small Cap index is trading down by 0.2%.

On the sectoral front, all sectors are trading in red, with stocks from the telecom sector, witnessing most of the selling pressure.

US stock futures are trading mixed today.

Nasdaq Futures are trading up by 60 points (up 0.4%) while Dow Futures are trading down by 77 points (down 0.3%)

The rupee is trading at 72.81 against the US$.

Gold prices are trading down by 0.5% at Rs 48,878 per 10 grams.

In international markets, gold prices dipped 0.3% today ahead of the US Federal Reserve's monetary policy decision due later in the day. While the US central bank is not expected to make any major announcements, traders will be keen to find out about any new plans for monetary policy.

Note that gold has come under pressure in recent days on concerns that US stimulus package could be delayed.

Amid weak global prices, gold prices today fell sharply in Indian markets. On MCX, gold futures were down 0.6% to near one-month low of Rs 48,845, extending losses to the fourth day.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best performing commodities this year to combat the fallout from the coronavirus pandemic.

To know more about gold, check out our article on how to invest in gold here: How to Invest in Gold?

Moving on to stock specific news...

Among the buzzing stocks today is L&T.

Larsen and Toubro (L&T) reported its highest-ever fresh order intake in a quarter, for the quarter ended December, at Rs 732.3 billion, a jump of 76% year-on-year (YoY) while its order book stood at a historic high of Rs 3,130 billion.

The performance was backed by the company winning some big marquee orders in the infrastructure segment. New orders included large wins in High-Speed Rail Corridor, large orders in the hydrocarbon sector, and also large equipment supplies order in the construction and mining business. International orders during the quarter constituted 14% of the total order inflow, with 86% of orders coming in from the domestic market.

The company also reported a 5% YoY increase in its net profit for the quarter to Rs 24.6 billion. Revenues during the quarter, however, were still slightly lower as Covid-19 restrictions continued to have an impact on project site execution and Hyderabad metro operations. On a YoY basis, revenues declined 2% to Rs 355.9 billion but were up 15% on a sequential basis.

Earnings before interest, tax, depreciation and amortization (EBITDA) of the company increased 4.3% YoY to Rs 42.8 billion, while EBITDA margins were up 60 basis points YoY to 12%.

In terms of the segments, the infrastructure segment secured orders of Rs 455.7 billion, higher by 80% on a YoY basis. The EBITDA margin of the segment stood at 6.2%, up 10 basis points annually. The power segment did not secure any major order during the quarter and the segment's EBITDA margin was at 2%, lower compared to 3.4% in the corresponding quarter.

The EBITDA margin of the Heavy engineering segment came in at 20%, a decline over the corresponding quarter of the previous year of 23.5%, on account of changes in job mix. The hydrocarbon segment secured orders valued at Rs 128.2 billion during the quarter supported by receipt of some large value domestic orders in the petrochemicals space.

We will keep you posted on more updates from this space. Stay tuned.

At the time of writing, L&T share price was trading down by 1.9% on the BSE.

Speaking of stock markets, India's #1 trader, Vijay Bhambwani, talks about why it's not a good idea to blindly support the bullish consensus prevalent in the market these days, in his latest video for Fast Profits Daily.

Tune in here to find out more:

Moving on to news from the shipping sector...

Adani Ports to Raise US$ 500 Million From Overseas Bond Sale

Adani Ports & Special Economic Zone, the largest port operator in the country, is in the international debt market with a benchmark issue to raise at least US$ 500 million. This is the third large bond sale by domestic issuers after Exim Bank's US$ 1 billion issue at record low prices in the first week of the month followed by the State Bank of India (SBI) in the second week with a US$ 6 billion sale.

The company will use the proceeds from the issue primarily for refinancing the early redemption of its dollar bonds due in 2022.

The highly leveraged Adani Group is on massive expansion mostly using debt. In July 2020, the company had raised $750 billion and in December another $300 million, to retire some of its higher cost debt.

The issue has been rated BBB- by Fitch and Baa3 by Moody's.

Fitch Ratings in a note gave the proposed senior unsecured notes sale by the port operator a BBB- rating with a negative outlook.

The rating reflects the company's market-leading position, the stability of long-term cargo revenue and its operational efficiency, the agency said, adding the pandemic may result in weaker domestic demand and exports, but cargo mobility is largely uninterrupted despite the global lockdowns.

In a separate note, Moody's assigned a Baa3 rating to the issue with a negative outlook.

The rating takes into consideration the long-term growth potential of the domestic economy, a key driver behind the large increase in the volume of traded goods over the past few years, it said, adding the port operator reported 5.4% growth in cargo volumes in the first nine months of the current fiscal year.

Adani Ports is the largest port developer and operator in the country in terms of volume, with coal and other dry bulk terminals showing an annual capacity of 478.6 million tonnes.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

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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