Gold ETFs See Huge Inflows, WPI Inflation Falls 3.21% in May, and Top Cues in Focus Today

Tue, 16 Jun Pre-Open

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Indian share markets ended deep in the red yesterday.

Indian stock markets slipped tracking weak global cues as fears of a second wave of coronavirus infections compelled investors to ditch risky assets and rush to safe-havens. Further, a sharp jump in coronavirus cases in India weighed on investor sentiment.

Stocks in the banking sector and realty sector were among the hardest hit.

IndusInd Bank, Axis Bank and DLF fell in the range of 5-8%.

On the other hand, energy stocks witnessed buying interest.

At the closing bell yesterday, the BSE Sensex stood lower by 552 points, down 1.6%.

Meanwhile, the NSE Nifty closed down by 159 points.

The BSE Mid Cap index ended the day down by 1.2%, while the BSE Small Cap index ended on a flat note.

Global stock markets plunged yesterday as United States and China grappled with new coronavirus outbreaks, signaling that the pandemic isn't done wreaking havoc on the global economy.

Asian stock markets also recorded steep declines after Beijing recorded a fresh cluster of the virus originating in the city's largest wholesale food market.

The Chinese capital has recorded 79 new cases since a locally transmitted infection was reported last Friday for the first time in nearly two months.

Speaking of Indian stock markets, the last two and a half months have been a roller coaster ride. After a sharp correction of 33% from the peak, stock markets witnessed a sharp rebound, and then flip flopped last Friday amid global sell off.

In her latest video, Richa Agarwal, editor of our premium smallcap service Hidden Treasure, shares her thoughts on the implications of the market volatility for the potential returns in the smallcap space.

Tune in to find out more...

WPI Inflation Contracts 3.21% in May

Wholesale prices in India witnessed a deflation of 3.21% in May due to sharp decline in prices of fuel and power, even as food articles turned expensive.

In a statement, the commerce and industry ministry said that the annual rate of inflation, based on monthly Wholesale Price Index (WPI) has declined by 3.21% in May against a rise of 2.79% in the year-ago period.

Manufactured products witnessed a deflation of 0.42% in May.

Due to the nationwide lockdown imposed since March 25, the ministry had released truncated WPI inflation data for April, with figures of food, primary articles and fuel and power.

However, it has advised its field offices to collect price data through electronic means and the final index for the month would be released next month.

The final print of March WPI inflation stood at 0.42% as compared to its provisional levels of 1% reported on April 14, 2020, the ministry said.

Meanwhile, as per a leading financial daily, India's industrial production contracted 55.5% in April, the sharpest ever, as the Covid-19-induced lockdown almost froze economic activities.

The Index of Industrial Production (IIP) had shrunk 18.3% in March.

Gold ETFs See Net Inflows of Rs 8.2 Billion in May

Gold exchange traded funds (ETFs) saw net inflows of Rs 8.2 billion in May as investors preferred safe haven options amid stock market volatility and the coronavirus crisis.

According to latest data available with the Association of Mutual Funds in India (Amfi), a net sum of Rs 8.2 billion was pumped into gold-linked ETFs in May, much higher than the net Rs 7.3 billion infused in April.

The same category had seen net outflows of Rs 2 billion in March.

The inflows meant assets under management (AUM) of gold funds climbed to Rs 101 billion at the end of May, from Rs 91.9 billion at the end of April.

Overall, mutual fund houses witnessed inflows of over Rs 708 billion across all segments in May as compared to inflows of Rs 460 billion in April.

We will keep you updated on all the developments from this space. Stay tuned.

Speaking of gold, 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 recent videos, Vijay Bhambwani, editor of Fast Profits Daily explains why this year's US presidential elections could be bullish for gold.

As per him, the US presidential cycle may not be as predictable this time as it usually is. But there is good money to be made if you can play this trend correctly.

He shows a simple way to profit from this important event.

Tune in to know more: This Year's US Presidential Cycle Could Be Bullish for Gold and Silver

Dr Reddy's Secures Deal to Produce Covid-19 Drug

Dr Reddy's Laboratories has entered into a non-exclusive licensing agreement with Gilead Sciences to register, manufacture and sell Remdesivir, a potential treatment for COVID-19, in 127 countries including India.

Reportedly, Dr Reddy's will receive technology transfer from Gilead for manufacturing of this drug and needs to do the manufacturing scale-up and obtain regulatory approval for marketing of this drug in respective countries.

Remdesivir, an investigational antiviral therapy developed by Gilead, received Emergency Use Authorization (EUA) by the US Food and Drug Administration (USFDA) to treat hospitalised patients with severe COVID-19 illness.

In May, four companies, i.e. Hetero, Jubilant Life Sciences, Cipla and Mylan NV, entered into non-exclusive licensing agreements.

They are still awaiting permission from the Drug Controller General of India (DCGI) for manufacturing and distribution Remdesivir in the country.

A few days ago, Zydus Cadila announced that they have also entered into a non-exclusive licensing agreement with Gilead Sciences for Remdesivir.

India currently does not manufacture Remdesivir.

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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