Sensex Ends Higher, Hike in Petrol and Diesel Duty, Stocks in Focus, and Top Cues to Track Today

Thu, 7 May Pre-Open

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Indian share markets ended on a positive note yesterday.

Benchmark indices opened on a negative note yesterday as rising coronavirus cases and grim growth projections dampened investor sentiment. However, losses were recovered thereafter as indices rose over 1.5%.

Gains were largely seen in the finance sector, banking sector and telecom sector, while FMCG stocks witnessed selling pressure.

At the closing bell yesterday, the BSE Sensex stood higher by 232 points (up 0.7%) and the NSE Nifty closed higher by 65 points (up 0.7%).

SGX Nifty was trading at 9,287, up by 104 points, at the time of writing.

The BSE Mid Cap index ended up by 0.8%, while the BSE Small Cap index ended up by 0.5%.

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

Excluding the fall of this week, 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.

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.

Our special report, How to Trade the Coronavirus Crash, is the most comprehensive report on how to trade the coronavirus, both from a short-term and long-term perspective. You can claim your FREE copy here...

Top Stocks in Focus Today

ITC share price and Axis Bank share price will be in focus today as the government is seeking to raise around Rs 220 billion by selling its entire stake in these companies.

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.

Market participants will be tracking Kansai Nerolac share price, Yes Bank share price and TCI Developers share price as these companies announced their March quarter results (Q4FY20) yesterday.

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.

Apart from the above, market participants will also be tracking liquor stocks after some state governments hiked excise duty on liquor.

Some state governments including Andhra Pradesh and Rajasthan, decided to restrict the timings of liquor shops as well as hike excise duty as a step to restrict buying, while the Mumbai Municipal Corporation decided to shut all liquor shops in Mumbai from yesterday.

United Breweries share price, Radico Khaitan share price, United Spirits share price, GM Breweries share price, and Globus Spirits share price witnessed selling pressure yesterday on the back of above news.

India's Services Sector Activity Collapses in April

India's services activity witnessed a shock 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%.

How these numbers pan out for coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

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: Ajit Dayal's View on the Impact of the Coronavirus & Oil Prices on the Economy

Government Announces Steep Hikes in Petrol and Diesel Excise Duty

From the oil & gas sector, shares of oil marketing companies (OMCs) will be in focus today after the government announced steep hikes in duties on petrol and diesel, raising it by Rs 10 and Rs 13 per litre, respectively.

Shares of HPCL, BPCL and Indian Oil Corporation (IOC) will be the most to lose on the back of the above development.

The government on Tuesday said that the Road and infrastructure cess was hiked by Rs 8 for petrol and diesel and the special additional excise duty (SAED) was hiked by Rs 2 per litre and Rs 5 per litre, respectively.

While the road cess will only go into the Centre's holdings, the hike on account of SAED will be passed on to states via devolution at 42%.

This decision comes after several states increased the value-added tax (VAT) on petrol and diesel. The Delhi government on Tuesday increased VAT on petrol and diesel to 30% each.

Reports state that this move is a big negative for OMCs, but it is positive for the economy.

The government needs revenue and this will possibly help kick start the economy, which is staring at a significant downturn with job losses, dismal GDP print due to the disruption caused by Coronavirus outbreak.

What effects the above move have on Indian stock markets and the Indian economy remains to be seen. Stay tuned for more updates from this space.

And 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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