Indian Indices Continue Momentum; Sensex Ends 284 Points Higher

Wed, 3 Jun Closing

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

Extending gains for the sixth consecutive day, Indian stock markets edged higher on the back of high buying seen in banking and auto sector.

At the closing bell, the BSE Sensex stood higher by 284 points (up 0.8%).

Meanwhile, the NSE Nifty closed higher by 82 points (up 0.8%).

The SGX Nifty was trading at 10,084, up by 105 points, at the time of writing.

The BSE Mid Cap index ended the day up by 0.3%.

While the BSE Small Cap index ended up by 1.2%.

On the sectoral front, gains were largely seen in the banking sector and realty sector.

Telecom stocks and Power stocks on the other hand witnessed selling pressure.

Asian stock markets ended on a positive note. As of the most recent closing prices, the Nikkei ended higher by 1.29%, while the Shanghai Composite gained 0.07%.

The Hang Seng ended higher by 1.37%.

The rupee is trading at 75.44 against the US$.

Speaking of stock markets, as per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, the Covid-19 crisis could be the best investing opportunity in small-cap stocks.

In her latest video, she talks about the stocks that will do well despite the lockdown.

Tune in to know more...

Stocks from the aviation sector were in focus today.

IndiGo share price was in focus as the company reported its March quarter results.

The company reported a loss of Rs 8.7 billion in the January-March quarter versus a profit of Rs 5.9 billion in same period last fiscal.

Loss for the full year was Rs 2.3 billion compared to a net profit of Rs 1.5 billion the previous year.

Revenue for the March ending quarter grew just 4.5% to Rs 86.3 billion from Rs 82.6 billion a year earlier.

In a post-earnings conference call with analysts, CEO Rono Dutta said the airline made an operating profit in the month of January and February but a loss of Rs 3.8 billion for the month of March. The government suspended all airline operations on March 24 as part of a nationwide lockdown to prevent the spread of the Coronavirus.

Flights resumed from May 25 and airlines have on average been able to fill barely half their flights.

Dutta and the airline's chief financial officer Aditya Pande said the airline is taking various cash conservation and cost cutting measures to survive. They said salaries had been cut between 5%-25% for most staff and bonuses were deferred and leave without pay schemes implemented for May-July.

Apart from that, vendor contracts are being reworked. The company has also got to defer 50% of supplementary rentals for this year as those rentals are linked to how much aircraft fly and many will remain grounded for many months.

IndiGo incurred Rs 58.6 billion on supplementary rentals aircraft repair and maintenance for FY20, compared to Rs 36.8 billion a year earlier.

Pande said all of the above measures would help IndiGo save cash of Rs 30 to 40 billion over nine months.

We will keep you updated on how these measures help the company in the coming months. Stay tuned.

Moving on to news from the commodity space, gold was witnessing selling pressure today.

Losses were seen tracking weakness in international spot prices that fell on reducing safe-haven appeal amid signs of a recovery in business activity as governments restart their economies.

On the MCX, August gold futures fell 0.20% to Rs 46,470 per 10 grams after tumbling more than Rs 500 in the previous session.

In the international market, gold fell for a second straight session on Wednesday as stocks jumped on hopes for further stimulus and optimism about an economic recovery, thereby dampening demand for the safe-haven metal.

Strong Indian rupee against the US dollar also pressurized the yellow metal prices.

Speaking of gold, note that the interest in gold has gone up ever since stock markets crashed in March.

Gold prices in the international markets are getting close to its all-time high.

Last month, gold prices hit a new high of Rs 47,980 tracking rally in global rates amid increasing US-China tensions and expectations of further stimulus from central banks. With this, gold rallied to its highest since October 2012, driven by economic damage concerns, US-China tensions, and massive monetary and fiscal stimulus.

How lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what we wrote about this in one of the editions of The 5 Minute WrapUp...

• In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment.

In one of his videos, Apurva Sheth, lead chartist at Equitymaster, compares gold and bitcoin. He explains, which is the better asset in this difficult economic situation.

Tune in to know more: Gold or Bitcoin: What Will You Go With?

And 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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