Indian Indices Recover; Sensex Ends 190 Points Lower

Tue, 12 May Closing

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After declining over 2% in early trade today, Indian share markets witnessed sharp recovery in the last hour of trading, but still ended on a negative note.

Benchmark indices edged lower today, tracking weak global cues as fears of a second wave of coronavirus infections spooked investors.

After weeks of no new cases, Wuhan reported six new infections in two days and South Korea announced its biggest spike in new cases in more than a month.

Apart from weak global cues, the indication by the government that the lockdown could be extended beyond May 17 also weighed on the sentiment.

The government had yesterday indicated that the nationwide lockdown could be extended, albeit with eased restrictions for businesses.

Prime Minister Narendra Modi is set to address the nation at 8 PM today.

At the closing bell, the BSE Sensex stood lower by 190 points and the NSE Nifty closed down by 43 points.

SGX Nifty reversed all its losses and was trading at 9,218, up by 4 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended their day down by 0.8% and 0.6%, respectively.

Sectoral indices ended on a mixed note with stocks in the energy sector and banking sector witnessing selling pressure, while telecom stocks and power stocks witnessed buying interest.

Asian stock markets finished on a negative note. The Hang Seng was down 1.5%, while the Nikkei was down 0.1%. The Shanghai Composite stood lower by 0.2%.

Gold prices are currently trading up by 0.2% at Rs 45,865.

The rupee was trading at 75.46 against the US$.

Note that the coronavirus impact has shaken markets worldwide. 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.

Also speaking of stock markets, in the recent episode of Investor Hour, Rahul Goel talks to Vijay Bhambwani, who he calls India's #1 trader.

Vijay dives deep in the "coronavirus" situation and talks about stocks, bonds, the rupee, gold, silver, crude oil, and more.

Whatever you do, don't miss this issue of the Investor Hour!

Listen in here...

Moving on, market participants were tracking Bandhan Bank share price, Havells share price, and Nestle share price as these companies announced their March quarter results (Q4FY20) today.

In news from the insurance sector, new business premium for life insurers contracted for a second straight month, with business significantly hit by the coronavirus outbreak and lockdown.

In April, new business premium declined 32.6% to Rs 67.3 billion, from Rs 99.3 billion for the same period last year.

Earlier in March, it had declined 32% to Rs 254.1 billion, from Rs 374.6 billion in March 2019.

Further, the overall sum assured declined by 16.4% to Rs 2.27 trillion in April 2020, from Rs 2.72 trillion in April 2019.

Life Insurance Corporation (LIC) saw new business premium decline 32% to Rs 35.8 billion from Rs 52.7 billion a year ago.

Similarly, private insurers witnessed a decline of 33.3% in new business premium for April, to Rs 31.5 billion against Rs 47.1 billion in April 2019.

HDFC Life's new business premium (NBP) declined 53% to Rs 6.7 billion, while ICICI Prudential Life Insurance saw NBP decline almost 60% to Rs 2.6 billion.

However, SBI Life Insurance saw a marginal increase of 0.5% to Rs 9.2 billion.

Bajaj Allianz Life was an outlier, recording 43% growth in NBP to Rs 3.1 billion.

Care Ratings in its report has said that if this trend continues, the life insurance segment could report negligible growth in Q1FY21.

How this trend continues in the coming months remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Moving on to news from the banking sector, as per an article in The Economic Times, Nippon Life has begun discussions with the Hinduja family to explore a strategic investment in IndusInd Bank.

Here's an excerpt from the article:

• Buying into a bank will help Nippon get a much-needed bancassurance partner for distributing its insurance products and secure big corporate treasury money for its asset management business in India. An investment from a foreign player with deep pocket will also solve the bank's capital issue for now.

Note that, shares of IndusInd Bank have witnessed huge selling pressure in the past three months. Stock of the private lender has crashed about 70% between March and early April.

Last month, the private lender had mandated Morgan Stanley and Citi to raise US$ 500-750 million confidence capital from private investors.

The Hinduja family had also asked the Reserve Bank of India (RBI) for permission to increase their stake to 26% from the mandated 15%, citing the recent relaxation granted to Uday Kotak, promoter of Kotak Mahindra Bank.

IndusInd Bank share price ended the day up by 3.2%.

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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