Sensex Down Over 280 Points; Global Stock Markets Hit by Trump's Tariff Threat

Mon, 6 May 12:30 pm

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Share markets in India are presently trading on a negative note. Sectoral indices are trading in the red with stocks in the consumer durables sector, metal sector and automobiles sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 284 points (down 0.7%), while the NSE Nifty is trading down by 92 points (down 0.8%). The BSE Mid Cap index is trading down by 0.6% and the BSE Small Cap index is trading down by 0.5%.

The rupee is trading at Rs 69.37 against the US$.

Asian stock markets are trading on a negative note as of the most recent closing prices. The Hang Seng is down by 3.3% and the Nikkei is trading down by 0.2%.

European markets were trading on a mixed note. The FTSE 100 was up by 0.4%. The DAX was trading down by 1.9%, while the CAC 40 was also trading down by 1.9%.

Tata Chemicals share price is in focus today as the company reported a 26.5% year-on-year (YoY) jump in its net profit at Rs 4.5 billion for the fourth quarter of 2018-19. The rise here was seen on back of strong sales. The above profit excludes Rs 8.5 billion profit from its discontinued operations in the said period.

Total income increased to Rs 28.4 billion on a consolidated basis during the January-March quarter of 2018-19 from Rs 26.3 billion in the year-ago period.

Commenting on the performance, the company's managing director and CEO R Mukundan said that the company is pleased to share a positive overall performance despite some challenges on the energy cost and overall plant's fixed cost. He added that the overall operational efficiency continues to grow and the performance was on expected lines across all geographies, except a few obstacles in the UK operations.

The company said it has forayed into homecare segment with the pilot launch of Tata DX, a detergent brand, which was tested in the West Bengal market and received a positive consumer response.

The company's board has recommended a dividend of Rs 12.50 per share.

At the time of writing Tata Chemicals share price was trading up by 5.8% on the BSE.

In the news from macroeconomic space, market participants will be taking cues from the fifth phase of the general elections which is taking place today.

Voting will take place on 51 Lok Sabha constituencies from 7 different states.

As per the news, after four phases of elections, the voting percentage is 67%, comparable to 67.6% in 2014. The fifth phase of voting will take place on May 6.

Speaking of elections and the general mood in Indian stock market these days, a lot of market participants are playing the prediction game ahead of the elections.

A common theme is to sit on cash to escape the volatility ahead of the upcoming elections. In case there is an unexpected event, you can then get in post the correction.

But does timing the market work?

Not really, if you see the market performance in the year of the past three national elections (2004,2009 and 2014).

Downside of Timing The Stock Market

Looking at the returns in the above chart, staying out of the market to escape volatility would have been a costly affair every time.

The market gave above average returns in all three of those years.

This does not mean one can expect the same in the future.

But there's one thing for sure. Predicting short-term directions of the market is a futile and many a times a costly affair.

That's why we believe in picking safe stocks when they are actually 'safe' i.e. during such times of high pessimism and uncertainty.

In the news from global financial markets, stocks in China are witnessing huge selling pressure today. Stock markets in China sell as much as 6% in today's morning trade after US President Donald Trump threatened to raise tariffs on all Chinese imports to 25%.

The US president made the above threat in a pair of tweets on Sunday - just a few days ahead of a round of trade negotiations scheduled to begin on Wednesday.

He tweeted that levies imposed on Chinese goods over the past year as part of the trade war with Beijing were partially responsible for great economic results in the US and had little impact on product cost.

He further added that the current 10% tariffs on US$ 200 billion worth of Chinese goods would rise to 25% on Friday, and that US$ 325 billion of additional Chinese goods that were currently untaxed would shortly be subject to tariffs of 25%.

The above news sent China's CSI 300 index of major Shanghai and Shenzhen-listed stocks down as much as 6.1%. This was the benchmark's worst day since February 2016.

The above development follows trade war between the world's top two economies after Trump administration last year published a list of about 1,300 Chinese exports worth US$ 50 billion that could be hit by US tariffs because of Beijing's alleged theft of intellectual property and technology. China hit back with a levy 25% tariffs on imports of 106 US products.

The tit-for-tat tariffs are part of a wider clash looming over trade between the world's two biggest economies.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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