Sensex Ends 917 Points Higher; Metal and Banking Stocks Rally

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Indian share markets traded on a positive note throughout the day, tracking global cues. Benchmark indices extended gains as the session progressed, to erase all the Budget day losses.

Investor sentiments got a boost from the manufacturing sector rising to an eight-year high in January. The widely-tracked IHS Markit India Manufacturing purchasing managers' index (PMI) rose from 52.7 in December to 55.3 in January, its highest level in just under eight years.

On the sectoral front, gains were largely seen in the metal sector, banking sector and consumer durables sector.

At the closing bell, the BSE Sensex stood higher by 917 points (up 2.3%) and the NSE Nifty closed higher by 272 points (up 2.3%).

The BSE Mid Cap index ended up by 1.2%, while the BSE Small Cap index ended the day up by 1.3%.

Asian stock markets finished on a positive note as of the most recent closing prices. The Hang Seng was up 1.2% and the Nikkei stood higher by 0.5%.

The rupee was trading at 71.23 to the US$ at the time of writing.

Speaking of the current stock market scenario, while everyone out there is buzzing about the Union Budget and what it has in store for the stock markets, our analysts at Equitymaster are singing a different tune.

They are encouraging readers to look beyond the short-term blip that the Budget will bring and focus on the long-term trend that will rule the market.

Vijay Bhambwani, editor of Fast Profits Daily, has recorded his views on the market post the union budget in his latest video. You can access the same here: My Outlook for Traders After the Budget

Meanwhile, here's what Rahul Shah wrote about the budget in a recent edition of The 5 Minute WrapUp...

• All said and done, the fact of the matter is that the economy is indeed struggling.
  
  And it will be some time before a full-fledged recovery is achieved.
  
  However, is the situation so bad that it deserved a close to 1,000 point correction on the Sensex?
  
  Well, I don't think so.
  
  It is not as if the economic growth will fall dramatically from here. Yes, certain big bang measures in the budget would have led to a faster recovery perhaps. But ours is a long term story with certain hiccups along the way like we are witnessing right now.
  
  And that means pouncing on any adverse reaction from the market like the present one.

As per him, a meaningful fall in the market is an opportunity to buy the long term India story at a marked down price. And it should be seen as a boon and not a bane.

Already, the broader market valuation is looking a lot more attractive than it did a few weeks back.

Some more knee jerk reaction by the stock market and it could turn out to be one the biggest buying opportunities in years.

Also, the smallcap index is rebounding. In fact, it is just 1% below the level it was a year ago.

As per our smallcap analyst Richa Agrawal, you can find a lot of great buying opportunities in the smallcap space and this is a great time to be invested in smallcaps.

However, she also points out that not everything you touch will turn into gold. You should be very careful and selective in picking the most solid and promising smallcap stocks.

In the video below she talks about the ongoing economic slowdown, an upcoming rebound in the small cap space, and her number 1 stock pick for 2020.

Tune in to know more...

Market participants were tracking Bharti Airtel share price, CSB Bank share price, and PNB share price as these companies announced their December quarter results today.

In news from the IPO space, the employees' union of Life Insurance Corporation (LIC) will be staging an hour-long walk-out strike to protest against the government's move to sell its stake in the state-run insurer through an initial public offering (IPO). The walk-out will take place at all offices of the insurance behemoth across the country.

As per the union, listing of LIC is against national interest as over the years it has been playing a pivotal role in nation building activities. On a capital base of Rs 50 million, the union said LIC's valuation surplus was Rs 532.1 billion, life fund stood at Rs 28.28 lakh crore and asset under management over Rs 31.11 lakh crore at the end of FY19.

The move comes as Finance Minister Nirmala Sitharaman in the Union Budget announced that the government, which holds 100% stake in LIC, will sell a part of its holding through an IPO. The same is planned to achieve the government's record asset-sale target which could fetch the government between 850 billion to 900 billion rupees if it gets done this year.

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

Speaking of IPOs, in one of the editions of The 5 Minute WrapUp, Ankit Shah shared how IPOs offer insights into the mood of the stock markets.

He picked the six most successful IPOs of 2019 and checked the retail investor enthusiasm for them.

Obviously, all these IPOs were oversubscribed across investor categories. But the level of retail investor enthusiasm differed widely, depending on the overall market sentiments. This can be seen in the chart below:

Are Retail Investors Back in the IPO Game?

Here's what Ankit wrote about it...

• Clearly, IRCTC witnessed the highest number of bids for the retail category. Factoring in the discount of Rs 10 per share for the retail category, the total bids were worth a whopping Rs 3,242 crore. Over five times the entire IPO size!
  
  Polycab India and the recent IPO of CSB Bank also received a strong thumbs-up from retail investors.

Does this hint that retail investors are coming back to the markets? Could we witness of flurry of IPOs in the coming months?

It would be interesting to see how this trend pans out in the coming months.

Ankit keeps a tab on all the IPOs at his premium newsletter Equitymaster Insider (requires subscription).

In one of his recent articles, he has explained why keeping a tab on the IPO market is vital to your overall investing goals. You can read it here: What I Learnt from IPOs in 2019 (requires subscription).

In other news, Ujjivan Small Finance Bank (USFB) said it has used the entire Rs 7.4 billion equity capital that it raised through an IPO in December on meeting the future capital requirement of the Bank.

The lender had raised Rs 7.45 billion through an IPO in December 2019.

The company said the funds were raised to augment to tier-1 capital base to meet future capital requirement of the bank.

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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