Sensex Ends 97 Points Lower; Banking and Power Stocks Witness Selling

Wed, 17 Jun Closing

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Indian share markets witnessed volatility throughout the day and ended their session marginally lower.

Losses were seen as it was reported at least 20 Indian Army personnel were killed in a "violent face-off" in Ladakh's Galwan Valley on the night of June 15-16.

It was further reported that four more Indian soldiers are in critical condition. Prime Minister Narendra Modi has called an all-party meet on June 19 to discuss the situation.

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

On the other hand, telecom stocks witnessed buying interest.

At the closing bell, the BSE Sensex stood lower by 97 points, down 0.3%.

Meanwhile, the NSE Nifty closed down by 32 points.

The BSE Mid Cap index ended the day up by 0.3%, while the BSE Small Cap index ended up by 0.7%.

SGX Nifty was trading at 9,844, down by 60 points, at the time of writing.

Asian stock markets ended on a mixed note.

As of the most recent closing prices, the Hang Seng was up 0.56% and the Nikkei stood lower by 0.57%.

The rupee was trading at 76.30 against the US$.

Speaking of stock markets, note that the last two and a half months have been a roller coaster ride for Indian indices.

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...

Moving on, IL&FS was among the buzzing stocks today as the Supreme Court refused to stay the Bombay High Court (HC) order to quash all prosecution against the audit firms - BSR & Associates LLC and Deloitte Haskins and Sells, pending before the National Company Law Tribunal (NCLT) and a special court in the city.

The order was passed by a Bench comprising Chief Justice SA Bobde and Justices MR Shah and AS Bopanna.

The Bombay High Court, in its order on April 21, had dismissed a plea by the Ministry of Corporate Affairs (MCA) to ban the two auditing firms for a five-year period.

The MCA had sought the ban on grounds that the two auditors failed to catch the financial fraud at IL&FS.

India Cements share price was also in focus today as it was reported that Radhakishan Damani is considering acquiring a controlling stake in the cement manufacturer company.

Damani, the owner of Avenue Supermarts, has informally reached out to the cement manufacturer's controlling shareholder, N. Srinivasan, to explore a takeover.

Srinivasan, who controls about 29% of the Chennai-based cement maker, is also exploring other investors to ward off any hostile bids. Reports state that Damani has promised a friendly change in management and isn't seeking a hostile takeover.

Moving on to news from the macroeconomic space, the Supreme Court (SC) today adjourned hearing on plea that sought waiver of interest on EMIs during the six-week moratorium period. The matter will now be heard in the first week of August.

The SC said there is " no merit in charging interest on interest" for deferred loan payment instalments during the moratorium period announced in wake of the COVID-19 pandemic.

A bench headed by Justice Ashok Bhushan observed that once moratorium is fixed then it should serve the desired purposes and the government should consider interfering in the matter as it cannot leave everything to banks.

The above development comes as the bench was hearing a plea filed by an Agra resident Gajendra Sharma, who has sought a direction to declare the portion of the Reserve Bank of India's (RBI) March 27 notification.

The plea read that the notification was ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower and creates hindrance and obstruction in 'right to life' guaranteed by Article 21 of the Constitution of India.

The bench, which posted the matter for hearing in first week of August for allowing the Centre and the RBI to review the situation, asked the Indian Banks Association to examine whether they can bring new guidelines in the meantime on the issue of loan moratorium.

In news from the commodity space, gold witnessed volatility today. The yellow metal witnessed profit booking in the morning trade today even as Covid-19 cases in India mounted and tensions escalated between India and China.

However, gold prices held steady later in the day, supported by concerns stemming from a surge in coronavirus infections in Beijing but with hopes for a potential COVID-19 drug and a stronger US dollar.

Beijing reported new COVID-19 cases for the sixth day in the worst outbreak in the Chinese capital since early February, while new coronavirus infections hit record highs in six US states yesterday.

Market participants were also keeping a close eye on escalating tensions globally, as Indian and Chinese troops clashed at their disputed border, while North Korea blew up an inter-Korean liaison office set up in a border town.

Note that gold is in the limelight these days amid the ongoing coronavirus crisis, geopolitical tensions, and volatility in stock markets.

In India, 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.

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.

How the above developments affect gold prices in coming days remains to be seen. Meanwhile, we will keep you updated on all the news from this space.

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 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

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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