Sensex Opens Lower; IT Stocks Under Pressure

Thu, 16 Apr 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 0.2% while the Hang Seng is down 0.5%. The Nikkei 225 is trading down by 1.2%. US stocks fell on Wednesday as dismal economic data and first-quarter earnings reports compounded concerns over the extent of damage from the coronavirus outbreak.

Back home, India share markets opened lower. The BSE Sensex is trading down by 212 points while the NSE Nifty is trading down by 60 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.1% and 0.3% respectively.

Except healthcare stocks, all sectoral indices are trading in red with IT stocks and consumer durables stocks witnessing maximum selling pressure.

Moving on, gold prices are currently trading up by 0.9% at Rs 46,710.

The rupee is currently trading at 76.56 against the US$.

The coronavirus impact has shaken markets worldwide. Indian stock markets have felt the full impact too.

For the BSE Sensex, FY20 was the second worst year post FY08, the year of the global financial crisis.

Good Time to Start Investing Now?

Naturally, there is an atmosphere of fear all round.

Is it time to sell stocks now? Will the correction get worse?

History has shown that after years like the one we had just now, the next 3 years are good for the markets.

In fact, these corrections are the rare times when you find businesses with solid fundamentals at reasonable valuations.

If you can find good businesses that can survive the current crisis, you will do well in the long run.

In the news from IT sector. Amid the ongoing COVID-19 crisis, Wipro announced that there have been no big deal cancellations in the last three months and posted a toned-down net profit of Rs 23.3 billion for the March quarter, a 5.3% decrease from Rs 24.6 billion in the previous quarter.

Despite a 4.7% y-o-y increase in profit at Rs 157.1 billion, the company for the first time since its listing on NYSE in 2000, did not give any revenue guidance for Q1 FY21.

Wipro reported 80 basis point decline in its operating margin at 17.6% as compared to 18.4% in the last quarter.

Growth across the business segments remained flat, with BFSI, consumer business unit and healthcare as the top three contributors.

In terms of geographies, the US and Europe continue to be the company's main revenue drivers. While the growth in the US remained flat at 29.1%, Europe saw a minor jump to 24.1% in Q4 FY20 from 23.7% in the last quarter.

However, as a result of the impact of the global COVID-19 crisis and lockdown, the management expects to see some changes.

As far as sectors go, the management stated that the aviation and hospitality sectors are heavily impacted by the ongoing crisis. Banking and media have been affected to some extent as well. Healthcare may get impacted in the near term, but it should be good in the mid to long term.

Wipro share price opened the day down by 2.1%.

Moving on to the news from the economy. The country's exports plunged a record 34.6% in March because of a steep decline in shipments of leather, gems and jewellery and petroleum products, dragging the total exports in 2019-20 down to US$314.3 billion.

Exports in March stood at US$21.4 billion, down 34.6% compared with US$32.7 billion in the same month last year.

This is expected to be the steepest fall in monthly exports since 2008-09, when shipments dipped 33.3% in March 2009.

Imports, too, contracted 28.7% to US$31.2 billion. This is the steepest decline since November 2015, when imports declined 30.3%.

The dip in exports and imports narrowed the trade deficit in March to US$9.8 billion, the lowest in the last 13 months. It was US$9.6 billion in February last year.

Oil and gold imports contracted 15% and 62.6% to US$10 billion and US$1.2 billion, respectively, in March 2019.

For the full fiscal (FY20), imports declined 9.1% to US$467.2 billion, narrowing the trade deficit to US$152.9 billion against US$184 billion in FY19.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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