Sensex Trades Marginally Higher; Tata Steel & ONGC Top Gainers

Fri, 5 Jun 12:30 pm

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Share markets in India are presently trading marginally higher, tracking positive global sentiments.

After rising more than 350 points in early trade today, the BSE Sensex is presently trading up by 128 points.

The NSE Nifty is trading up by 59 points, above the 10,000-mark.

Tata Steel share price and ONGC share price are the top gainers today.

Meanwhile, shares of Reliance Industries gained 2% after the conglomerate said that Abu-Dhabi based global investment company, Mubadala, would pick up 1.85% in Jio Platforms for Rs 90.9 billion.

The BSE Mid Cap index is trading up by 0.9%.

Meanwhile, the BSE Small Cap Index is trading up by 1.7%.

Among sectoral indices, stocks in the metal sector and energy sector are witnessing buying interest.

IT stocks on the other hand are witnessing selling pressure.

Gold prices are trading down by 0.7% at Rs 46,369 per 10 grams.

The rupee is currently trading at 75.44 against the US$.

In news from the IT sector, shares of Hexaware Technologies are locked in the upper circuit band of 20% today after the company said that its board is scheduled to meet on June 12, 2020 to consider the proposal for voluntary delisting of equity shares of the company.

In an exchange filing, the company said that HT Global IT Solutions Holdings, the promoter of the company has expressed its intention to acquire all fully paid up equity shares of the company that are held by the public shareholders of the company.

Reportedly, the promoter has considered a price of Rs 285 per equity share as a price at which it will be willing to accept equity shares in the delisting proposal.

The company further said the main objective of the delisting proposal is for the promoter/ promoter group to obtain full ownership of the company which will in turn provide increased operational flexibility to support the company's business.

In other news, NIIT Technologies share price is witnessing buying interest today.

Last month on May 29, the company had launched its Rs 3.4-billion buyback issue. The issue will remain open till June 11, 2020.

The company proposed to buy back up to 19,56,290 fully paid equity shares at a price of Rs 1,725 per share.

Note that many companies have launched share buybacks amid a sharp fall in their stock prices. Some of these companies include Motilal Oswal Financial Services, Delta Corp, Dalmia Bharat, Emami, Kalpataru Power and Granules India.

Speaking of buybacks, as a shareholder in cash rich companies, you should not only be wary of expensive buybacks. But if possible use it to your advantage to rake in some cash.

As per Rahul Shah, co-head of Research, investors should not assume buybacks are always good. Here's an excerpt of what he wrote in one of the editions of The 5 Minute Wrapup:

• The reason behind the buyback must be investigated. At the end of the day, an increase in earnings should be more a function of the inherent robustness of the business, as that's what will help it continue to grow at a healthy pace.

Moving on, as per the surveys released by the Reserve Bank of India (RBI) on Thursday, consumer confidence has collapsed amid the coronavirus pandemic and it may result in contraction of the economy by 1.5% during 2020-21.

As per the Consumer Confidence Survey (CCS) released by the RBI, consumer confidence collapsed in May 2020, with the Current Situation Index (CSI) touching historic low and the one year ahead Future Expectations Index (FEI) also recording a sharp fall, entering the zone of pessimism.

According to another survey, GDP during the current financial year is likely to contract by 1.5%, though the next fiscal is expected to be much better.

"Real gross domestic product (GDP) is likely to contract by 1.5% in 2020-21 but is expected to revert to growth terrain next year, when it is likely to grow by 7.2%," said the Survey of Professional Forecasters (SPF) sponsored by the RBI.

The survey further added that real gross fixed capital formation (GFCF) is likely to register negative growth of 6.4% in 2020-21.

Note that last week, the government released gross domestic product (GDP) numbers for the January-March quarter.

India's economy grew at 3.1% in January-March quarter, its slowest pace in at least eight years. The GDP growth exceeded most estimates made by various rating agencies.

Notably, India's GDP growth has been on a consistent decline after peaking out at 7.9% in Q4 of FY18 to 4.7% in Q3 of FY20, as can be seen in the chart below:

Declining GDP Growth for India

Interestingly, there's a silver lining in all this. India can become an outsourcing hub. The global slowdown will mean that countries like the US, will be looking out for low-cost outsourcing destinations like India.

Further, a lot of global buyers have already shifted to India to source ceramics, home appliances, fashion, and lifestyle goods.

Meanwhile, as per the reports, around a thousand foreign manufacturers want to relocate their production to India, a country they see as an alternative to China.

Here's an excerpt from one of the articles Tanushree Banerjee wrote on the Indian economic recovery:

• It's also a fact that India's importance in the global supply chain has never looked better. PM Modi himself referred to that.
  
  Therefore, utilising the stimulus package to tighten India's presence in the global supply chain will be the fastest way to move up the Swoosh index. Any delay or disregard would cost India dearly.
  
  True that Apple, Samsung and several smartphone manufacturers are already considering an expansion of their Indian capacities.
  
  But the land, labour, liquidity, and legal reforms cannot remain on paper if the Make in India dreams are to be realised.
  
  I expect to gather more cues about India's prospects on the Swoosh index over coming months.

Watch this space as Tanushree tracks these Rebirth of India megatrends closely.

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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