Sensex Trades 300 Points Higher; Yes Bank, TCS Among Top Gainers

Thu, 30 May 12:30 pm

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Share markets in India are presently trading on a positive note. Barring automobile sector and consumer durable sector, all sectoral indices are trading on a positive note with stocks in the power sector, telecom sector and IT sector witnessing maximum buying interest.

The BSE Sensex is trading up by 296 points (up 0.8%), while the NSE Nifty is trading up by 69 points (up 0.6%). The BSE Mid Cap index is trading up by 0.3% and the BSE Small Cap index is trading up by 0.2%.

The rupee is trading at Rs 69.76 against the US$.

Speaking of Indian benchmark indices, note that overall, the Sensex PE ratio has been in expansion mode over the last five years.

Between the election results of 2014 and 2019, the Sensex PE expanded by 52%.

The chart below shows the change in the Sensex price to earnings (PE) multiple over the last five years of Modi government.

Sensex Rally Driven by PE Expansion in Modi's First Term

What this means is that most of the gains in Modi's first term have come mostly from an expansion of valuation multiples and only partially due to earnings growth.

What are the implications for investors in Modi's second term?

Ankit Shah answers this question in one of the latest edition of The 5 Minute WrapUp. Here's an excerpt of what he wrote...

• In my view, what worked in Modi's first term may not necessarily work in the second one. Back in 2014, you could have put your finger on a random set of stocks, and there were good chances you would make money.
  
  But right now, the circumstances are quite different. The overall markets are trading at elevated valuation multiples. The economy has been showing signs of fatigue. The financial sector is still in a mess. Unemployment levels are high.
  
  For much of Modi's first term, the global markets were in a bull run. However, global economic conditions are not as favourable now. There are growing fears of an impending global slowdown. There has been an escalation in the US-China trade war.
  
  Given all these factors, do not expect the markets to have a broad-based bull run in Modi's second term.

With the elections done, the markets will now move based on earnings visibility, economic policies, global sentiments, and so on.

So, look out for the stocks that will rise fast when the tide of the market turns up.

Market participants are tracking Bharat Dynamics share price, TTK Healthcare share price, and PC Jeweller share price as these companies are set to announce their March quarter (Q4FY19) results today.

You can also read our recently released Q4FY19 Results: JSW Steel, Bata India, Sun Pharma, Aegis Logistics, Mphasis.

Manpasand Beverages share price is witnessing selling pressure today after some of its officials, who are under judicial custody following search by the Goods and Services Tax (GST) department, were denied bail.

Shares of the company are presently trading 10% lower at an all-time low of Rs 57.10. So far in the past four trading sessions, the stock has tanked 48%.

As per an article in The Economic Times, a couple of independent directors at the Vadodara-based company resigned on Monday. The company also cancelled its scheduled board meet, where it was looking to consider and approve March quarter results.

Here's an excerpt from the article:

• The meet is now cancelled due to unavoidable circumstances and also due to want of quorum during the board meeting.
  
  This is after the Commissioner of Central GST and Customs carried out search and seizure proceedings at various premises of the company last week. The company's managing director Abhishek Singh, his brother Harshvardhan Singh and chief financial officer Paresh Thakkar were arrested.

Earlier, the stock was under inspection after Deloitte Haskins and Sells LLP resigned as its auditor in May 2018, days before its earnings announcement, saying that significant information was not shared by the company.

Since Monday, the stock has been locked at the maximum lower circuit of the day on the BSE and NSE, with only sellers being seen on the counter.

Moving on to the news from the automobile sector, M&M share price reported a 16% drop in profit at Rs 9.7 billion for the quarter ended March 31, 2019.

Operating profit margin of M&M and Mahindra Vehicle Manufacturers (MVML) declined to 13.5% from 15.1% in the year ago period.

On a standalone basis, the company's profit declined 19.9% to Rs 8.5 billion from Rs 10.6 billion. Reportedly, this was because of an exceptional loss of Rs 1 billion on provisions for impairment of certain investments.

The board of the company has recommended a dividend of Rs 8.50 per share.

M&M share price is presently trading down by 1.6%.

Speaking of automobile stocks, one thing we must keep in mind is that not all auto companies will make money over time. And also, you shouldn't stay away from auto stocks altogether.

Even Tanushree Banerjee, Co-head of research at Equitymaster believes that there are businesses in this sector that you cannot ignore. She is particularly talking about the blue-chip auto stocks.

Here's Tanushree:

• One out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space. They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.
  
  Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times.

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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INDICESBSE (Rs 0 to 1)BSE (Rs 1 to 2)BSE (Rs 2 to 4)BSE (Rs 4 to 10)BSE (Rs 10 to 20)BSE (Above Rs 20)BSE - AllBSE-30BSE-100BSE-200BSE-500BSE AutoBSE BankexBSE Capital GoodsBSE Consumer DurablesBSE FMCGBSE HealthcareBSE ITBSE MetalBSE Oil & GasBSE PSUBSE TeckBSE RealtyBSE PowerBSE A GroupBSE B GroupBSE Mid-CapBSE Small-CapBSE Basic MaterialsBSE Consumer DiscretionaryBSE IndustrialsBSE UtilitiesBSE Sensex 50BSE Sensex Next 50BSE Bharat 22BSE 150 MidCapBSE 250 SmallCapBSE 250 LargeMidCapBSE 400 MidSmallCapBSE AllCapBSE LargeCapBSE SmallCap SelectBSE 100 LargeCap TMCBSE InfraBSE ManufacturingBSE CPSEBSE Private BankBSE Diversified FinancialsBSE MomentumBSE Low VolatilityBSE QualityBSE Enhanced ValueBSE Divident StabilityS&P BSE IPOBSE SMEIPOBSE 100 ESGBSE CarbonexBSE GreenexNSE (Rs 0 to 10)NSE (Rs 10 to 20)NSE (Above Rs 20)NSE - AllNSE-50NSE ITNSE Nifty Midcap 50NSE JR. NiftyNSE Bank NiftyNIFTY Next 50NIFTY 100NIFTY 200NIFTY 500NIFTY MidCap 100NIFTY SmallCap 250NIFTY SmallCap 50NIFTY SmallCap 100NIFTY LargeMidCap 250NIFTY MidSmallCap 400NIFTY AutoNIFTY Consumer DurablesNIFTY FinanceNIFTY FMCGNIFTY MediaNIFTY MetalNIFTY PharmaNIFTY Private BankNIFTY PSU BankNIFTY RealtyNIFTY Oil & GasNIFTY SME EmergeNIFTY CommoditiesNIFTY CPSENIFTY EnergyNIFTY India ConsumptionNIFTY InfraNIFTY MNCNIFTY PSENIFTY Serv SectorNIFTY100 Liquid 15NIFTY Midcap Liquid 15NIFTY Midcap 150 Quality 50NIFTY50 Equal WeightNIFTY100 Equal WeightNIFTY100 Low Volatility 30NIFTY100 Alpha 30NIFTY Alpha 50NIFTY Dividend Opportunities 50NIFTY High Beta 50NIFTY Low Volatility 50NIFTY200 Quality 30NIFTY 500 Value 50NIFTY 100 Quality 30SECTORSAgricultureAirlinesAluminiumAsset Management CompaniesAutomobilesAuto AncillariesBanks (Private)Banks (PSU)BankingCementChemicalsDefenceDiagnosticsDronesEngineeringElectric VehicleElectric Vehicle BatteryEnergy SourcesESGEthanolFertilizersFintechFMCGFoodGreen HydrogenHotelsInfrastructureInsuranceInvestment and FinanceInvITIT (Large)IT (Others)LogisticsMediaMetalMiningIndia's Big Tech StocksIndian PharmaMNC PharmaPSUPaintPaperPlasticPowerRating AgenciesReal EstateREITsRenewable EnergyRetailingSemiconductorShippingSteelSugarSupply ChainTelecomTextilesTravel Support Services

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