Sensex Falls Over 250 Points; Reliance Industries & Sun Pharma Top Losers

Thu, 30 Jan 12:30 pm

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Share markets in India are presently trading on a negative note. Benchmark indices edged lower today, amid concerns over the impact of coronavirus on global economy.

Barring power stocks, all sectoral indices are trading on a negative note with stocks in the IT sector and healthcare sector witnessing most of the selling pressure.

The BSE Sensex is trading down by 277 points while the NSE Nifty is trading down by 82 points. The BSE MidCap index and the BSE SmallCap index are trading down by 0.6%.

The rupee is trading at 71.49 against the US$.

In news from the commodity space, gold prices inched up today after the US Federal Reserve said the new coronavirus outbreak could hurt China's economy in the short term.

The Fed held rates steady on Wednesday, with its Chair Jerome Powell pointing to continued moderate economic growth and a "strong" job market, and giving no sign of any imminent changes in borrowing costs.

Powell said the new coronavirus outbreak is "a significant thing which will have some effects on the Chinese economy, at least in the short term."

In other news, India's gold demand fell 9% to 690.4 tonnes in 2019 from the previous calendar year as record domestic prices and economic slowdown dented retail purchase, the World Gold Council (WGC) said on Thursday.

As Indian gold prices jumped 25% in 2019, hitting a record high, consumption fell 9% from the previous year to 690.4 tonnes, the lowest since 2016.

However, WGC said that in 2020, gold demand in India could increase amid hopes of increased acceptance of high price level and likely economic reforms boosting consumer confidence.

Gold consumption in 2020 will likely be 700-800 tonnes, compared with 690.4 tonnes last year, said Somasundaram PR, the managing director of WGC's Indian operations. But government measures aimed at bringing transparency in bullion trading are likely to keep demand below the 10-year average of 843 tonnes, he added.

In value terms, India's gold demand rose 3% to Rs 2,17,770 crore in 2019 from Rs 2,11,860 crore in the previous year.

Gold buying in the key December quarter dropped 18% from a year earlier to an eight-year low of 194.3 tonnes.

The country's scrap supplies in 2019 jumped 37% to 119.5 tonnes, helping New Delhi to bring down net bullion imports by 14% to 646.8 tonnes, the WGC said.

Gold dealers are now awaiting the budget, which will be presented on February 1. In last year's budget, the government had raised import tax on gold to 12.5% from 10% earlier.

According to reports, the commerce ministry has sought a reduction in gold import duty to boost the jewellery sector.

Speaking of gold, 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...

Gold Has Been a Shining Long-Term Investment

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

Here's what Ankit Shah, the editor of daily premium newsletter Equitymaster Insider (requires subscription) wrote about this in one of the editions of The 5 Minute WrapUp...

• "In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment."

Meanwhile, Vijay Bhambwani talks about how gold has been relied upon by humankind for 3000 years in one of his videos.

If you consider street inflation, your fixed deposits are giving negative yields. In times like these, Vijay considers gold as a safe haven.

So, is it the time to buy gold?

Tune in to find out...

Moving on to news from the banking sector, the Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 10 million on HDFC Bank for failure to undertake on-going due diligence in case of 39 current accounts opened for bidding in Initial Public Offer.

Meanwhile, Axis Bank has raised Rs 41.8 billion through allotment of 41,750 Senior Unsecured Redeemable Non-Convertible Debentures of the face value of Rs 1 million each, at coupon rate of 7.65% per annum on a private placement basis.

The said debentures are rated 'AAA/Stable' by CRISIL and 'AAA/Stable' by ICRA.

HDFC Bank share price and Axis Bank share price are presently trading down by 1% and 0.4%, respectively.

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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