Sensex Opens on a Strong Note Tracking Global Cues; Metal & Realty Stocks Lead

Wed, 19 Jun 09:30 am

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Asian stock markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 1.7% while the Hang Seng is up 2.4%. The Shanghai Composite is trading up by 1.5%.

Wall Street stocks surged on Tuesday and the S&P 500 approached a record high after Washington rekindled trade talks with Beijing, boosting sentiment along with growing investor confidence that the Fed will cut interest rates this year.

Back home, India share markets have opened the day on a positive note. The BSE Sensex is trading up by 372 points while the NSE Nifty is trading up by 109 points. The BSE Mid Cap index and BSE Small Cap index both opened the day on a positive note.

All sectoral indices have opened the day on a positive note with metal stocks and realty stocks witnessing maximum buying interest.

The rupee is trading at Rs 69.52 against the US$.

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 healthcare sector, Wockhardt share price is in focus today as the company is working on alternate options to raise funds and reduce debt.

The company is reportedly planning to sell a minority stake in its domestic formulations business, and this is a precautionary move in case the private equity funds do not fructify.

Reports state that the Mumbai-headquartered firm is now reaching out to strategic suitors and is exploring the sale of select brand portfolios.

According to data from pharmaceutical market research firm AIOCD-AWACS, Wockhardt's gastro-intestinal, vitamins and minerals and respiratory segments recorded annual sales of Rs 2.4 billion, Rs 2.2 billion and Rs 2.1 billion, respectively.

The company has a total debt of Rs 37.4 billion as of March 31, 2018. The company's losses narrowed to Rs 140 million in the fourth quarter ended March 2019, on account of cost reduction.

It posted a net loss of Rs 1.6 billion during the same period in the previous year. Sales for Q4FY19 fell 4% to Rs 9.8 billion compared to Rs 10.2 billion in the year ago period.

Wockhardt share price opened the day up by 0.3%.

To know more about the company, you can read Wockhardt's latest result analysis on our website.

Moving on to the news from the banking sector, Canara Bank will initiate the process of stake sale in part/full in Canfin Homes share price as per the disinvestment policy of the lender.

The said permission is subject to disinvest at appropriate time depending on the market conditions and available options.

Meanwhile, the Reserve Bank of India fined country's largest private sector lender HDFC Bank Rs 10 million for not reporting frauds and non-compliance with other directions.

As per an article in The Economic Times, the fine pertains to submission of forged bill of entries (BoEs) by certain importers to HDFC Bank for remittance of foreign currency.

Here's an excerpt from the article:

• Examination in this regard revealed violations of RBI directions on 'KYC/AML norms' (know your customer/anti-money laundering) and on reporting of frauds.
  
  A notice was issued to HDFC Bank on why monetary penalty should not be imposed for non-compliance with the directions.

In a statement to exchanges, HDFC Bank said it has "taken necessary measures to strengthen its internal control mechanisms so as to ensure that such incidents do not recur".

Canara Bank share price and HDFC Bank share price opened the day up by 1.2% and 0.5%, respectively.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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