Sensex Opens Weak; Metal and Realty Stocks Fall

Wed, 26 Feb 09:30 am

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Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.4% while the Hang Seng is down 0.8%. The Nikkei 225 is trading down by 0.9%. Meanwhile, the Dow and the S&P 500 tumbled 3% on Tuesday in their fourth straight day of losses as the coronavirus spread further around the world and investors offloaded risky assets as they struggled to gauge the economic impact.

Back home, India share markets opened lower. The BSE Sensex is trading down by 238 points while the NSE Nifty is trading down by 69 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.7% and 0.3% respectively.

All sectoral indices have opened the day on a negative note with power stocks, realty stocks and metal stocks witnessing maximum selling pressure.

Speaking of the Indian share markets, note that Indian indices have witnessed a starkly polarised situation since 2018, after the uninterrupted bull rally of 2017 entered a period of correction.

While the Sensex recovered from the correction and went on to hitting new life-time highs, the broader markets - predominantly the small and midcap stocks haven't recovered much.

Ankit Shah, the editor of daily premium newsletter Equitymaster Insider (requires subscription), has been talking about this trend since a long time. But now, he has even more elaborate data to show you how deep this trend has been.

He pulled out data on 1,638 companies listed on the NSE.

And he shares his observations in a recent edition of The 5 Minute WrapUp...

• Between 29 December 2017 and 30 December 2019, just 246 companies have witnessed gains. Together, these 246 companies added Rs 29.8 trillion worth of market capitalisation.
  
  In other words, 1,392 companies are below the levels they traded at the end of December 2017. Together, these 1,392 companies lost Rs 28.6 trillion worth of market capitalisation.
  
  So, you see the money has literally shifted from one place to another.

Even among the 246 companies that witnessed gains, the major chunk was captured by just a small list of companies.

This can be seen from the chart below...

A Very Small Group of Stocks Captured All the Gains

As you can see, the top 5 companies captured 41% of all the gains in market capitalisation over the last two years. In fact, the top 30 stocks captured more than 80% of the gains.

In short, money has been rushing to safety, into large, liquid, bluechips stocks.

This brings the question: Where can you look for such bluechip stocks?

You can consider the bluechip recommendations made by our Safe Stocks guru, Tanushree Banerjee. She has picked her top 7 stocks for 2020.

Moving on, the rupee is currently trading at 71.77 against the US$.

The rupee on Tuesday recovered 13 paise to close at 71.85 against the US dollar amid easing crude oil prices and weakening of the American currency in the overseas market.

While weak dollar and easing crude oil prices supported the rupee, losses in domestic stocks and foreign fund outflows weighed on the local unit restricting its up move.

At the interbank foreign exchange market, the local currency opened on a positive note at 71.84. During the day, it saw a high of 71.78 and a low of 71.90.

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. As per an article in a leading financial daily, Lupin has launched Ethacrynic Acid Tablets USP, 25 mg, having received an approval from the United States Food and Drug Administration (USFDA) earlier.

The product would be manufactured at Lupin's Nagpur OSD facility, India.

The tablets are generic equivalent of Edecrin Tablets, 25 mg, of Bausch Health Americas Inc. and are indicated for the treatment of edema when an agent with greater diuretic potential than those commonly employed is required.

Lupin share price opened down by 0.3%.

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!

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