Sensex Opens Over 800 Points Up; Banking and Metal Stocks Rally

Thu, 9 Apr 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 0.3% while the Hang Seng is up 0.4%. The Nikkei 225 is trading down by 0.4%. US stock markets jumped on Wednesday on hopeful signs about the coronavirus outbreak in the United States was close to a peak, with health insurers getting an additional lift from Bernie Sanders' decision to suspend his presidential campaign.

Back home, India share markets rose in the opening session. The BSE Sensex is trading up by 727 points while the NSE Nifty is trading up by 217 points. The BSE Mid Cap index and BSE Small Cap index, both opened up by 1.3%.

All sectoral indices are trading in green with bank stocks and metal stocks witnessing maximum buying interest.

Note that, since the coronavirus outbreak, all BSE indices and NSE indices are down in the range of 25-35%.

Speaking of sectoral impact, in the article titled: Worst Hit Indian Sectors Amid Coronavirus Pandemic: 10 Points to Know, we dive deeper and look at how the impact has been on individual sectors...

Tanushree Banerjee believes the ongoing stock market correction could, in fact, be an inflection point for what she calls the irreversible Rebirth of India megatrends.

For bluechip stocks, she believes the time is ripe to begin buying some of the safest bluechips as there is safety in valuations and the market is offering them at deeper and deeper bargains.

The profits of bluechips (BSE 200 companies) are currently at a decade low as can be seen in the chart below.

A Rebound in Profits Overdue?

HYPERLINK "https://www.equitymaster.com/5minWrapUp/charts/index.asp?date=03/13/2020&story=1&title=03132020-A-Rebound-in-Profits-Overdue&utm_source=TM&utm_medium=website&utm_campaign=MCOM&utm_content=market-commentary" https://www.equitymaster.com/5minWrapUp/charts/index.asp?date=03/13/2020&story=1&title=03132020-A-Rebound-in-Profits-Overdue&utm_source=TM&utm_medium=website&utm_campaign=MCOM&utm_content=market-commentary <>

Tanushree is recommending her subscribers, to buy stocks selectively, a few at a time, by taking partial exposures to begin with.

She has already recommended 4 safe bluechips in the past month and there are several more in her watchlist. You can access them here: Here's How You Could Trade the Coronavirus Crisis Safely (requires subscription)

And if you are not a StockSelect subscriber, here's where you sign up.

Moving on, gold prices are currently trading up by 3.1% at Rs 44,941.

The rupee is currently trading at 75.93 against the US$.

The rupee plunged by 70 paise to its life-time low of 76.34 against the US dollar on Wednesday as a rise in coronavirus cases in the country fanned fears of the government extending the lockdown to contain the pandemic.

Rising Brent crude prices and a firm US currency also weighed on the local unit.

At the interbank foreign exchange, the rupee opened weak at 75.83 and lost further ground to settle at 76.34, registering a fall of 70 paise over its previous close.

On Tuesday, the rupee had settled at 75.64 against the US dollar.

Moving on the news from NBFC sector. Asper an article in a leading financial daily, nearly a dozen of large retail-focused non-banking finance companies (NBFCs) may need around Rs 100-200 billion of funds over the next few months for servicing their debt obligations and to run their operations.

Due to the ongoing lockdown, the primary cash flows of the NBFCs have been disrupted as their collections have come to a standstill.

These NBFCs would find it difficult to manage their cash flows unless they get access to additional bank lines or refinance, the report stated.

The aggregated debt repayment including interest for these retail NBFCs in the current quarter is estimated to be between Rs 400 billion to Rs 600 billion while their cash reserves are estimated to be around Rs 450 billion.

Last month, the Reserve Bank of India (RBI) had announced a three-month moratorium on repayment of term loans.

While most banks will provide back-to-back loan moratorium, there is no indication that it will be applicable for debt market instruments, the report stated.

Further, beyond the immediate liquidity challenges, the key risk for these NBFCs is a sharp deterioration in the delinquency levels subsequent to the expiry of the three-month moratorium.

Asper the report, the disruption from complete or partial lockdown will subside completely by the second quarter of FY21.

However, if the lockdown is prolonged, it can impact the sustainability of a few NBFCs.

How this pans out going forward remains to be seen. Meanwhile, we will keep you updated on the developments from this space.

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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