Sensex Opens Over 300 Points Up; IT and Energy Stocks Rally

Tue, 4 Feb 09:30 am

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.2% while the Hang Seng is up 0.8%. The Nikkei 225 is trading up by 0.2%. US stocks rallied on Monday, boosted by heavyweight technology shares and on surprise strength in US manufacturing activity, following a sharp selloff last week on concerns about the economic impact from the fast-spreading coronavirus out of China.

Back home, India share markets opened on a strong note. The BSE Sensex is trading up by 346 points while the NSE Nifty is trading up by 103 points. The BSE Mid Cap index opened up by 0.8% while BSE Small Cap index opened up by 0.7%.

Sectoral indices have opened the day on a mixed note with oil & gas stocks and IT stocks witnessing maximum buying interest. Realty stocks and healthcare stocks are trading in the red.

The rupee is currently trading at 71.25 against the US$.

The rupee pared early losses to settle 3 paise down at 71.35 against the US dollar on Monday, tracking recovery in domestic equities and easing crude oil prices.

Besides, the domestic unit weakened amid concerns of fiscal slippage and rising coronavirus outbreak fears, the reports noted.

The next trigger for the currency will be the Reserve Bank of India's monetary policy meeting, as its commentary on inflation as well as growth forecast would be keenly watched.

At the interbank foreign exchange market, the local currency opened at 71.62. During the day, it saw a high of 71.32 and a low of 71.66.

The domestic unit finally settled at 71.35, up 3 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 banking sector. According to the latest Reserve bank data, banks credit and deposits grew 7.2% and 9.5% to Rs 100.1 trillion and Rs 131.3 trillion, respectively, in the fortnight ended January 17.

In the year-ago fortnight, banks advance stood at Rs 93.3 trillion while deposits at Rs 119.9 trillion.

In the previous fortnight ended January 2, credit had grown by 7.6% to Rs 100.4 trillion and deposits by 9.8% to Rs 132.1 trillion.

Non-food bank credit growth decelerated to 7% in December 2019 from 12.8% in December 2018.

Loans to the services sector decelerated sharply to 6.2% in December 2019 from 23.2% last year same period.

Advances to agriculture and allied activities decelerated to 5.3% from 8.4% in December 2018.

Personal loans growth decelerated marginally to 15.9% from 17% in December 2018.

During the month, credit growth to industry decelerated to 1.6% from 4.4%.

Speaking of banking sector, 2019 has been brutal for some banking stocks.

The market has severely punished them. This is due to issues such as worsening asset-quality, corporate governance, and inadequate capital.

Stocks such as Yes Bank and Lakshmi Vilas Bank are down more than 70%.

Falling Knives in the Banking Sector

Falling stock prices could be enticing. After all, we love deep discounts and good bargains.

But if you're thinking of buying these stocks it's important to remember this point - If a stock is in a falling spree, there's probably a good reason behind it.

And realising this in a falling market is the first step towards correcting one's investing process.

In the video below, co-head of research, Rahul Shah shares a tip that he believes will hold good not just in 2020 but well beyond.

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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