Sensex Zooms 622 Points; Healthcare, Capital Goods and Finance Stocks Rally

Wed, 20 May Closing

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Indian share markets witnessed positive trading activity throughout the day and ended on a strong note.

Benchmark indices rose sharply in the afternoon session today, tracking mixed cues from global markets, backed by buying pressure in banking, financials and pharma stocks.

At the closing bell, the BSE Sensex stood higher by 622 points (up 2.1%) and the NSE Nifty closed higher by 187 points (up 2.1%).

The SGX Nifty was trading at 9,077, up by 193 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended their day up by 1.5% and 1.1%, respectively.

On the sectoral front, gains were largely seen in the healthcare sector, capital goods sector and finance sector.

Asian stock markets finished on a mixed note. Japanese stocks gained today, supported by hopes that the government would allow economic and social activities to resume in response to a decline in new coronavirus infections.

Investor sentiment also got a boost after the Bank of Japan said it would hold an emergency meeting on Friday to decide the details of a loan programme for small firms.

The Nikkei ended 0.8% higher on the back of above news. Meanwhile, the Hang Seng and the Shanghai Composite ended their day down by 0.1% and 0.5%, respectively.

European shares edged lower today as doubts over a potential COVID-19 vaccine reignited fears about the slow recovery from a looming global recession.

Gold prices are trading up by 0.3% at Rs 47,210 per 10 grams.

The rupee is trading at 75.79 against the US$.

Note that the coronavirus impact has shaken markets worldwide. After all, 2020 has already seen one of the worst market crashes in history.

Will the 2020 Market Crash Be Worse than 2009?

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.

Moving on, market participants were tracking Bajaj Auto share price, Ajanta Pharma share price and UltraTech Cement share price as these companies announced their March quarter results today.

In news from the pharma sector, Dr Reddy's Laboratories reported a 76% year-on-year (YoY) jump in its net profit for the quarter ended March 31, 2020 (Q4FY20).

For Q4FY20, the company's net profit stood at Rs 7,642 million against Rs 4,344 million in the corresponding quarter of the previous financial year.

Revenues came in at Rs 44.3 billion. E came at Rs 10 billion against an estimate of Rs 9.3 billion, while EBITDA margin came at 22.6%.

The company said that its global generics segment clocked a 20% YoY jump to Rs 36.4 billion.

Among the geographies, Europe's segment saw a jump of 80% YoY in revenue, while North America and emerging markets rose 21% and 15% YoY, respectively. India segment rose 5% YoY.

The company's board of directors also recommended a final dividend of Rs 25 per equity share for the financial year 2019-20.

Dr Reddy's Laboratories share price ended the day up by 5.9%.

Speaking of the pharma sector, in December 2019, co-head of Research at Equitymaster, Tanushree Banerjee had predicted that pharma could be the sector to see a big rebound in 2020.

And rightly so, most pharma companies have re-emerged as the safer bets for investors in the ongoing market turmoil. Last month, the Indian rupee touched a new record low of Rs 76.92 against the US dollar. Most pharma companies generate their revenues through exports. Hence, a depreciating rupee is a positive development for them.

As per Tanushree, in a post Covid-19 world, healthcare expenditures globally will see a big rejig.

Tanushree has her eyes on an exciting tech stock. The company in question is developing its medical division. It's focusing on telemedicine, which Tanushree believes will be a huge growth driver in a post Corona world.

Moving on to news from the power sector, Tata Power share price was in focus today.

The company on Tuesday posted a two-fold jump in its consolidated net profit to Rs 4.8 billion in Q4FY20. It has a consolidated net profit of Rs 1.7 billion in the year ago period.

The company, in its earnings release, said that the jump in consolidated net profit was due to due to gain on sale of Cennergi investment offset by impairment provision in SEO & reversal of MAT Credit due to transition to new tax regime in the renewables business.

The company's revenue slipped 9.4% to Rs 68.8 billion, as compared to Rs 76 billion in the corresponding quarter last year mainly due to delay in project execution in solar EPC business on account Covid-19, lower power demand and lower coal price.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the quarter was up 6% at Rs 20.1 billion as compared to Rs 19 billion during the previous quarter.

In other news, power utility company CESC said a board panel has approved raising Rs 3 billion through issuance of non-convertible debentures (NCDs).

As per reports, proceeds of the issue will be utilised for capital expenditure and general corporate purposes.

The issue is proposed to be listed on the Wholesale Debt Market segment of the NSE.

CESC share price ended the day down by 0.7%.

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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