Sensex Ends 470 Points Lower; Realty and Banking Stocks Witness Selling

Mon, 13 Apr Closing

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Indian share markets witnessed selling pressure throughout the day, tracking weakness in global peers amid heightened worries of COVID-19 virus outbreak.

Besides weak cues from global markets, World Bank's statement saying India and other South Asian countries are likely to record their worst growth performance in four decades this year due to the coronavirus outbreak, weighed on market sentiment.

Indian share markets also took cues from the news that Prime Minister Narendra Modi will address the nation at 10 am tomorrow.

Sectoral indices ended on a mixed note with stocks in the realty sector, banking sector and consumer durables sector witnessing selling pressure, while telecom stocks ended in green.

At the closing bell, the BSE Sensex stood lower by 470 points, while the NSE Nifty closed down by 118 points.

The BSE Mid Cap index ended the day down by 0.9%, while the BSE Small Cap index ended down by 0.5%.

Asian stock markets ended on a mixed note. As of the most recent closing prices, the Hang Seng was up 1.4% while the Nikkei was down 2.3%. The Shanghai Composite stood lower by 0.5%.

The rupee was trading at 76.26 against the US$.

In news from the commodity space, domestic gold prices hit a record high in futures markets today amid higher global rates.

On Multi Commodity Exchange (MCX), June gold futures surged over 2% to a new high of Rs 46,385 per 10 gram.

Tracking gold, silver futures also rose 0.4% to Rs 43,670 per kg.

In global markets, gold prices traded on a flat note and managed to hold on to one-month high rates.

Worries over economy amid the coronavirus outbreak and fresh stimulus measures announced by US Federal Reserve last week helped support gold.

Last week, the US Federal Reserve announced a US$ 2.3 trillion stimulus package to bolster local governments and small and mid-sized businesses.

In other news, investors infused over Rs 16 billion in gold exchange-traded funds (ETFs) in 2019-20, after pulling out money for the last six financial years.

Data available from the Association of Mutual Funds in India (Amfi) showed that asset under management (AUM) of gold funds surged by 79% to Rs 79.5 billion at the end of March 2020, from Rs 44.5 billion in March 2019.

As per Amfi data, investors put in a net sum of Rs 16.1 billion in 14 gold-linked ETFs in the just concluded financial year, while they had pulled out Rs 4.1 billion in 2018-19.

The safe haven asset had witnessed net outflows of Rs 8.4 billion in 2017-18, Rs 7.8 billion in 2016-17, Rs 9 billion in 2015-16, Rs 14.8 billion in 2014-15 and Rs 22.9 billion in 2013-14.

Investment into gold ETFs picked up in January this year with investors putting in Rs 2 billion. This was followed by an all-time high investment of Rs 14.8 billion in February.

Speaking of gold, you will be surprised to know that the safe haven has outperformed equities over a 15-year period.

Have a look at the chart below:

An equal amount of Rs 100 invested in both gold and Sensex in 2004 would have generated higher returns in gold by a wide margin.

Your total investment in gold and Sensex would be valued at Rs 687 and Rs 410, respectively.

So, investors in gold are happier than investors in Sensex or equities at this moment.

Moving on to news from the pharma space, Indoco Remedies share price was in focus today. Stock of the company rallied 16% intraday today after the company delivered the first shipment of Paracetamol tablets to the UK.

The company informed exchanges that it has been part of the great initiative by the Indian government to export Paracetamol tablets to the UK in its fight against COVID-19.

The company said that the first shipment of 1.17 million Paracetamol tablets to the UK was airlifted on April 12 from Goa airport.

In other news, shares of pharma companies continued their rally today with the S&P BSE Healthcare index hitting fresh 52-week high on the back of positive developments in the sector.

As many as nine frontline pharma stocks including Dr Reddy's Laboratories, Cipla, Divi's Laboratories, Torrent Pharma, and Abbott India have seen their share prices hit 52-week highs in the past one week.

Last week, the government had lifted curbs on exports of 13 active pharmaceutical ingredients (APIs) and their formulations.

Speaking of the pharma sector, in December 2019, co-head of Research at Equitymaster, Tanushree Banerjee had predicted that pharma could be the sector to see a big rebound in 2020.

And rightly so, most pharma companies have re-emerged as the safer bets for investors in the ongoing market turmoil. The Indian rupee touched a new record low of Rs 76.55 against the US dollar last week. Most pharma companies generate their revenues through exports. Hence, a depreciating rupee is a positive development for them.

As per Tanushree, in a post Covid-19 world, healthcare expenditures globally will see a big rejig.

The world needs affordable medicines in large quantities. Very few can supply them in the quantity and cost that Indian drug makers can. Yet, most Indian pharma stocks are trading at historically low valuations.

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.

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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