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Sensex Opens in Green; FMCG and Metal Stocks Gain
Tue, 25 Feb 09:30 am

Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 2% while the Hang Seng is down 0.3%. The Nikkei 225 is trading down by 3.4%. Meanwhile, the S&P 500 and the Dow Jones Industrial Average on Monday suffered their biggest one-day percentage losses in two years after a surge in coronavirus cases outside China fanned worries about the global economic impact of a potential pandemic.

Back home, India share markets opened higher. The BSE Sensex is trading up by 125 points while the NSE Nifty is trading up by 37 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.3% and 0.4% respectively.

Barring bank stocks and telecom stocks, all sectoral indices have opened the day on a positive note with FMCG stocks and metal stocks witnessing maximum buying interest.

Speaking of Indian share markets, we've been telling you about the rebound in smallcap stocks in 2020 for quite some time now.

And the market trend since the start of 2020 tells us, it's already happening!

Have a look at the chart below:

Smallcaps Are Way Ahead of the Sensex in 2020

As you can see, since the start of 2020, smallcaps have beaten largecaps by a wide margin.

But this is just the start.

We believe smallcaps have a long way to go.

You can make good gains with a careful selection of smallcap stocks and long-term horizon.

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, fundamentally strong smallcap stocks will not only survive but thrive in the long term.

Moving on, the rupee is currently trading at 71.85 against the US$.

The rupee on Monday fell by 34 paise to close at more than three-month low of 71.98 against the US dollar, tracking heavy selling in domestic equities and strengthening of the American currency in the overseas market.

Reportedly, investor sentiment remained fragile amid concerns over the impact of coronavirus outbreak on global economy.

At the interbank foreign exchange market, the local currency opened on a negative note at 71.94.

During the day, the domestic currency touched a high of 71.76 and a low of 72.01 and finally settled 34 paise lower at 71.98 against the US currency.

This is the lowest closing level since November 13 when the rupee had settled at 72.09.

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 the pharma sector. Amid ongoing lockouts in parts of China following the outbreak of coronavirus, rating agency ICRA has revised its outlook on Indian pharma industry to negative from stable.

The agency mentioned that the domestic drug industry is highly dependent on imports, with more than 60% of its active pharmaceutical ingredients (API) requirement being shipped from overseas locations, especially China.

In some specific active pharmaceutical ingredients (APIs), like cephalosporins, azithromycin and penicillin, the dependence is as high as 80 to 90%.

It also said of the total imports of APIs and intermediates into India, China accounts for 65-70%. It further asserted the situation is more alarming in case of intermediates of stages prior to APIs and key starting materials (KSMs) which are the building blocks for drugs, wherein, in some cases, China is the exclusive supplier.

Domestic API manufacturers have an inventory of one-two months, which should adequately support their production till mid-March 2020.

Besides, it noted that the outbreak of the coronavirus in China and the consequent lockout in parts of China have resulted in a shutdown of production units in China.

Though majority of the pharmaceutical manufacturing facilities in China are located far away from the coronavirus affected sites, there has been a disruption in the supply chain due to the lockouts.

Speaking of pharma sector, in the video below, co-head of research, Tanushree Banerjee talks about where the sector stands now and also about the potential for a rebound.

Watch Now...

Meanwhile, Tanushree is counting on 7 top stocks from the Indian stock market that will benefit from what she calls the Rebirth of India.

As per her, now is the right time to buy these stocks to profit from the Rebirth of India. You can read about them here.

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!

Read the latest Market Commentary


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