Sensex Surges 500 Points; HDFC & Hero MotoCorp Top Gainers

Wed, 6 May 12:30 pm

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Share markets in India are presently trading on a positive note. After opening the day marginally lower, benchmark indices staged a sharp rebound, driven by finance and banking stocks.

Indian share markets slipped in opening trade today as rising coronavirus cases and grim growth projections dampened investor sentiment.

Barring FMCG stocks and consumer durable stocks, all sectoral indices are trading in green with stocks in the finance sector and banking sector witnessing most of the buying interest.

The BSE Sensex is trading up by 409 points while the NSE Nifty is trading up by 106 points.

The BSE Mid Cap index is trading up by 0.5%, while the BSE Small Cap index is trading up by 0.6%.

Gold prices are currently trading up by 0.1% at Rs 45,800.

The rupee is currently trading at 75.71 against the US$.

Speaking of the current stock market scenario, Indian stock markets have seen a stunning recovery over the last 5 weeks.

From its all-time high levels of 42,274 touched on January 20 this year, the Sensex crashed 39% to a multi-year low at 25,639 on March 23. Later, the index made a rapid recovery till April 30 as it added 4,250 points.

Thereafter, in just two sessions of this month, Sensex lost 7%.

Excluding this week's 7% fall, of all the rebounds after a 35%-40% fall in the market, the current one has been the biggest by a distance.

This is evident from the chart below:

Sensex: From Bear to Bull in 30 Days

While the Sensex has rebounded sharply, there are still many stocks out there that are trading at attractive valuations.

Co-head of research at Equitymaster, Rahul Shah, believes this is a good time to get into stocks, even if you missed the rally because the market is fairly valued.

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.

Moving on, market participants are tracking Kansai Nerolac share price, Yes Bank share price and TCI Developers share price as these companies are slated to announce their March quarter results (Q4FY20) later today.

You can read our recently released Q4FY20 results of other companies here: ACC, CRISIL, Ambuja Cement, IndusInd Bank, Axis Bank, Tech Mahindra, HUL, Reliance Industries, Marico.

In news from the macroeconomic space, India's services activity suffered a shock collapse in April as the lockdown crippled global demand, causing a historic spike in layoffs and reinforcing fears of a deep recession.

The Nikkei/IHS Markit Services Purchasing Managers' Index plunged to 5.4 in April from March's 49.3, an unprecedented contraction since the survey first began over 14 years ago.

All of the survey's key gauges plummeted. An index measuring foreign demand for services ceased to an unprecedented 0.0, while an overall demand index also fell to an historic low and firms laid off workers at the quickest clip ever.

Meanwhile, the manufacturing PMI stood at a mere 27.4 in April, which was 51.8 in March.

The above findings come at a time when factory activity also contracted at its sharpest pace on record.

Factory activity, combined with a services sector in freefall, dragged the composite PMI to an all-time low of 7.2 last month from March's 50.6.

Earlier, a Reuters poll showed the Indian economy is likely to suffer its worst quarter since the mid-1990s in the April-June quarter, contracting 5.2%.

In one of his videos, Ajit Dayal, founder of the Quantum Group, shares his views on the impact of Coronavirus crisis on the Indian economy and the stock market.

You can check the same here.

Moving on, as per a leading financial daily, the government is seeking to raise around Rs 220 billion by selling its entire stake in FMCG major ITC and Axis Bank.

The government holds stake in both companies through Specified Undertaking of the Unit Trust of India (SUUTI), which owns 7.94% in ITC and 4.7% in Axis Bank, as on March 31, 2020.

As of yesterday's closing price, the combined value of SUUTI stake in ITC and Axis Bank is Rs 221.2 billion.

SUUTI has minority stakes in 51 listed and unlisted companies, with most of its value locked in Axis Bank, ITC and L&T. It has already sold its entire stake in L&T.

The government has sought to raise Rs 2,100 billion from the sale of holdings in state-run companies, for this fiscal.

This includes Rs 900 billion to be raised from the sale of a minority stake in Life Insurance Corp (LIC) through an initial public offer (IPO) and equity sale in IDBI Bank.

How this stake sale pans out remains to be seen. Stay tune for more updates.

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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