Airline Stocks Rise, Life Insurers Bleed in April, SGX Nifty Recovers Losses, and Top Cues in Focus Today

Wed, 13 May Pre-Open

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Indian share markets ended on a negative note yesterday.

Losses were seen 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 earlier this week indicated that the nationwide lockdown could be extended, albeit with eased restrictions for businesses.

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

The BSE Mid Cap index and the BSE Small Cap index ended 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.

The SGX Nifty reversed all its losses and was trading at 9,218, up by 4 points, at the time of Indian stock market closing hours yesterday.

SGX NIFTY is a derivative of NIFTY index traded officially in Singapore stock exchange.

How it performs this week and affects trades in Indian markets remains to be seen.

We will keep you updated about its movement in upcoming market commentaries. Stay tuned.

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 believes there's money to be made in the market... across asset classes.

He talks about about stocks, bonds, the rupee, gold, silver, crude oil, and pretty much everything of interest to both traders and investors.

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Also, the coronavirus impact has shaken markets worldwide. Indian stock markets have felt the full impact too.

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.

Airline Stocks to Benefit from Resumption in Operations

Airline stocks will be in focus 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 Tuesday.

Shares of InterGlobe Aviation (IndiGo) and SpiceJet witnessed huge buying interest yesterday on the back of above news.

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.

It would be interesting to track how the above resumption in operations takes place and what effect it has on airline stocks. Stay tuned to get updates from this space.

Life Insurance Premium Collection Falls in April

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.

We will keep you updated on how this trend shapes up in coming months.

Auto Sector Amid Covid-19

In news from the automobiles sector, India's automakers have warned that total automobile sales could fall as much as 45% in the current fiscal year in a worst-case scenario as economic growth slumps due to the COVID-19 pandemic.

They are also seeking government help through the crisis.

The Society of Indian Automobile Manufacturers (SIAM) stated that if India's economy contracts by 2% in the year starting April 1, sales of cars, trucks and motorbikes could decline by as much as 45% from a year before.

SIAM presented two more scenarios to the government, one where the economy grows by 2-3%, which would lead to a 20% decline in auto sales, and a second where growth stagnates from last year, resulting in a 35% decline in sales.

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

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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