Sensex Corrects Over 650 Points; Kotak Mahindra Bank and HDFC Bank Top Losers

Tue, 12 May 12:30 pm

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Share markets in India have extended early losses and are presently trading deep in the red.

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.

Sectoral indices are trading on a mixed note with stocks in the energy sector, banking sector and finance sector witnessing selling pressure, while IT stocks are trading in green.

The BSE Sensex is trading down by 644 points (down 1.9%), while the NSE Nifty is trading down by 182 points (down 2%).

The BSE Mid Cap index is trading down by 1.8% and the BSE Small Cap index is trading down by 1.3%.

The rupee is trading at Rs 75.78 against the US$.

Gold prices are currently trading up by 0.2% at Rs 45,850.

Speaking of the current stock market scenario, Indian stock markets have seen a stunning recovery over the past few 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 last 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 Bandhan Bank share price, Havells share price, and Nestle share price as these companies are scheduled to announce their March quarter results (Q4FY20) later today.

In news from the paints sector, Asian Paints share price is witnessing selling pressure today.

Stock of the company is trading lower for the 11th straight day amid concerns of demand destruction in the near term due to the coronavirus outbreak.

In the past 11 trading sessions, shares of Asian Paints have tumbled around 18%.

Reports state that in the April-June quarter (Q1FY21) and July-September quarter (Q2FY21), demand will be impacted by lockdown and monsoon.

Earlier this month, it was reported that Reliance Industries is considering selling its stake in Asian Paints valued at about US$ 989 million.

The company controlled by Mukesh Ambani is in discussions with banks for a potential sale of its 4.9% stake in Asian Paints through a series of block trades.

Reportedly, the size and timing of any potential sale haven't been finalized, and Reliance could decide not to proceed with a deal.

We will keep you updated on how this all pans out. Stay tuned for more updates.

Moving on to news from the aviation sector, airline stocks are in focus today.

Shares of InterGlobe Aviation (IndiGo) and SpiceJet surged up to 5% today amid reports that the government could soon resume domestic flight operations in India.

Reportedly, India is considering allowing some domestic flights to resume on May 18 or earlier as the government looks to reopen a key part of the economy and provide relief to airlines.

The Ministry of Civil Aviation is in talks with airlines, travel agents and the federal home ministry about the move.

This move comes after the government permitted resumption of passenger train services from today.

Note that Indian airlines have slashed salaries and furloughed staff as they try to weather the pandemic and its devastating impact on travel.

Both rail and flight services were suspended in India since March 25 when the nation went into a complete lockdown.

In another development, InterGlobe Enterprises, the parent company of India's largest airline IndiGo, has evinced interest in Virgin Australia, Australia's second-largest aviation company.

Reportedly, InterGlobe Enterprise has appointed an Australian consultant to look into the bidding process of Virgin Australia.

However, in an exchange filing, InterGlobe Aviation clarified that its airline IndiGo has neither formulated any indicative proposal, nor does it have any interest in this matter.

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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