Sensex Ends 117 Points Lower; Power and FMCG Stocks Witness Selling

Fri, 31 May Closing

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India share markets witnessed selling pressure during closing hours and ended their volatile trading day marginally lower.

At the closing bell, the BSE Sensex stood lower by 117 points (down 0.3%) and the NSE Nifty closed down by 23 points (down 0.2%).

The BSE Mid Cap index ended the day up 0.2%, while the BSE Small Cap index ended the day down 0.7%.

Sectoral indices ended on a mixed note with stocks in the metal sector, FMCG sector and power sector witnessing most of the selling pressure.

The rupee was trading at 69.75 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.8% and the Shanghai Composite was down by 0.2%. The Nikkei 225 was down 1.6%.

European markets were also trading on a negative note. The FTSE 100 was down by 1%. The DAX was trading down by 1.8%, while the CAC 40 was down by 1.4%.

Speaking of Indian share markets, what should be your investing strategy be for Modi's second term?

As per Richa Agarwal, Modi's victory seems to be the inflection point for a rebound in smallcap stocks.

You see, over the last one and a half year, a huge gap has emerged between smallcap index and Sensex.

Despite a lackluster performance on earnings front for both, smallcap stocks crashed...while Sensex flirted with lifetime highs.

Have a look at the chart below.

Since Jan 2018, the Sensex has gained 14% while smallcap index has lost 25%. That's a relative underperformance of 39%.

But this dichotomy cannot keep on growing forever.

As Richa writes in a recent edition of The 5 Minute WrapUp...

• You see, last time the market showed a similar trend was in the year 2013...just before Modi rose to power.
  
  Between January 2013 to August 2013, the smallcap index has crashed by over 30%, while Sensex stayed put. And smallcaps were approached with the same scepticism they have witnessed over the last year.
  
  But what happened after that was even more interesting.
  
  Within a few months post August 2013, the smallcap index caught up with the Sensex. And it didn't just catch up.
  
  Under Modi's first term, until January 2018, the smallcap index rose nearly four times versus a less than 2 times gain in Sensex.

As per Richa, history is going to repeat itself.

If you are interested in riding the volatility and earning great returns in the long term, you could join Richa's small cap club and invest in these 4 solid small caps.

In the news from the macroeconomic space, it was announced that under the new NDA government Nirmala Sitharaman will be the new Finance Minister as well as Corporate Affairs Minister, while Rajnath Singh would be Defence Minister.

Under Modi 2.0 Cabinet, Amit Shah will become Home Minister while Piyush Goyal will be Commerce and Railway Minister.

Nitin Gadkari holds Road, Transport and Highways Ministery along with MSME, while RK Singh is appointed as Power Minister.

In the news from the commodity space, crude oil witnessed selling pressure today.

Oil prices fell more than 1% today after US President Donald Trump said he would impose tariffs on imports from Mexico, which stoked fears about global economic growth.

Trump, in an announcement reported that a 5% tariff would be levied on all goods from Mexico with effect from June 1 and tariffs would remain in place till Mexico takes effective action to alleviate the flow of migrants.

Moreover, the announcement warned that tariffs would go up to 25% by October if Mexico did not take sufficient action.

Crude oil prices also fell on the back of a smaller-than expected decline in US stockpiles.

The fall in price led stocks of oil marketing companies trade on a positive note today. Indian Oil Corporation share price, HPCL share price, and BPCL share price witnessed buying interesy on the back of above news.

Speaking of crude oil, Vijay Bhambwani, editor of Weekly Cash Alerts, called the US President Donald Trump's bluff on crude oil in his recent article. Here's an excerpt of what he wrote...

• From 2018 US is the largest oil producing country in the world with 13.4% of the global oil output daily.
  
  The USA has jumped ahead of Saudi Arabia and Russia in oil output. My question to every oil trader out there is this - as long as the USA was an importer, it made sense to push for lower oil prices. There were tangible benefits in doing so.
  
  President Donald Trump runs the world's largest debtor nation. One that is gasping for export income and a strong dollar. A firm USD ensures easier servicing and repayment of debt and vice versa. So now that Trump wants to export oil, and earn petro dollars does it benefit him if oil prices were to go up or down? So why does he tweet for lower oil prices?

To know more, you can read Vijay's entire article here: Crude Oil - What 'Trump Nation' Really Wants

To know what's moving the Indian stock markets, 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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