Indian Stock Markets Open Flat; Metal and Telecom Stocks Lag

Tue, 28 Jan 09:30 am

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Asian stock markets extended a global selloff today as China took more drastic steps to combat the coronavirus. Japan's Nikkei was 0.7% down, Australian shares stumbled 1.3% and South Korea's Kospi index skidded 2.6%. US stocks suffered their worst day in over three months on Monday as China extended the Lunar New Year holiday due to a virus outbreak, fuelling worries about the economic impact of containment efforts in the world's second largest economy.

Back home, India share markets opened on a flat note. The BSE Sensex is trading up by 59 points while the NSE Nifty is trading up by 12 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.2% and 0.4% 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 automobiles stocks have opened the day in green.

The rupee is currently trading at 71.38 against the US$.

The rupee declined by 10 paise to settle at 71.43 against the US dollar on Monday, amid heavy selling in domestic equities following increasing concerns over spreading of coronavirus from China to other countries.

Reportedly, the Indian rupee and bonds declined in line with other Asian peers after intensifying coronavirus spread from China to other countries.

However, easing crude oil prices supported the domestic unit.

At the interbank foreign exchange market, the local currency opened on a weak note at 71.51.

During the day, the local unit gained some ground and finally settled for the day at 71.43 against the US dollar, down 10 paise over its previous close.

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 pharma sector. Dr Reddy's Lab's recovery has been slow but steady, with health metrics improving across regions. Its stock got a boost soon after the earnings were announced yesterday.

Revenue rose 14% year-on-year (y-o-y) in Q3, with decent volume and value growth coming from its main US and Indian markets.

Sequentially, however, revenue fell 9% as the firm had recognized revenue of about Rs 7.2 billion from out-licensing two products in the preceding three months.

Price erosion in the US continues, though at a slower pace.

In fact, Dr Reddy's reported an 8% y-o-y revenue growth in the US due to a steady stream of launches. Some of its older products also gained volumes.

Still, one of the issues pending before Dr Reddy's is the ongoing re-inspection of its API manufacturing plant at Srikakulam. In November 2015, the US Food and Drug Administration (FDA) had issued this plant a warning letter. This has been an overhang on the stock for some time now.

Overall global sales are on the rise due to the increase in incidences of diseases and viral outbreaks. Russia, for instance, grew 20% y-o-y, while emerging markets expanded 12% y-o-y.

Dr. Reddy's share price opened down by 0.3%.

Here's an interesting data on Dr. Reddy's Lab, investing just Rs 100,000 in Dr. Reddy's Labs in 1992, it would have given a whopping Rs 4.89 crores in 2014!

Profit Opportunities in the Rebirth of India

Co-head of Research, Tanushree Banerjee believes, the opportunities in the Rebirth of India are not only more profitable than the ones in 1991 but the gains could come faster too.

Meanwhile, in the video below, Tanushree talks in great detail about pharma sector. She tells us where the sector stands now and also about the potential for a rebound.

Watch Now...

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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