Indian Share Markets Witness Huge Selling; Sensex Ends 407 Points Lower

Fri, 21 Jun Closing

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India share markets witnessed selling pressure during closing hours and ended their trading day deep in the red.

At the closing bell, the BSE Sensex stood lower by 407 points (down 1%) and the NSE Nifty closed down by 108 points (down 0.9%).

The BSE Mid Cap index ended the day down 0.4%, while the BSE Small Cap index ended the day up 0.1%.

Sectoral indices ended on a negative note with stocks in the auto sector, telecom sector and energy sector witnessing most of the selling pressure.

The rupee was trading at 69.53 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was down by 0.27% and the Shanghai Composite was up by 0.5%. The Nikkei 225 was down 0.95%.

European markets were trading on a positive note. The FTSE 100 was up by 0.06%. The DAX was trading up by 0.14%, while the CAC 40 was up by 0.38%.

In the news from the pharma sector, Aurobindo Pharma share price was in focus today. The stock of the company witnessed selling pressure after it said it has received a warning letter from the USFDA.

The company in a BSE filing said that it has received a warning letter dated June 20, 2019, from USFDA relating to Unit XI, API manufacturing facility situated at Srikakulam district in Andhra Pradesh.

The above action follows the earlier inspection of the site by the USFDA in February 2019.

Last week, the USFDA had pointed out data integrity lapses at the company's finished dosages plant at Bachupally in Telangana. The FDA had issued Form 483 with 10 observations to Aurobindo Pharma on the plant which was audited by the US drug regulator between May 13 and May 24.

Moving on to the news from the construction space, Larsen & Toubro share price was in focus today as the company announced it has completed construction of Medigadda barrage under Kaleshwaram project in Telengana in just 24 months.

Nila Infrastructure share price was also in focus as the company announced it has received an order for development of integrated group housing facility at Sonaria Block, Rakhiyal-Asarwa, Ahmedabad. The project is on PPP Basis (public-private partnership basis) under Redevelopment of Public Housing Scheme - 2016 of Urban Development & Urban Housing Department, Government of Gujarat.

Speaking of the infrastructure sector, did you know India became the world's fastest highway building economy under Modi 1.0? In the last five years, India constructed approximately 39,000 kms of highways. That is a jump of nearly 60% from the UPA-2 tally.

The NHAI achieved the pace of building highways at 32 kms per day in FY19. Its target for FY20, at 40 kms per day is almost 25% higher.

And as per Tanushree, this uptrend in execution could be a big tailwind for infra companies. As she writes...

• Now, I do not expect the 25% jump in road building to come in one fiscal.
  
  However, I believe it is important this trend of improvement in execution continues.
  
  And such a trend could be a big tailwind for many infra companies.
  
  Also, Modi 2.0's infra plans are not restricted to road building alone.
  
  Railways, waterways, drinking water pipelines, green energy, and affordable housing could also form a bulk of the Rs 100 lakh crore opportunity.

But does that mean investors should jump at the next hot infra stock?

No.

Because even if India's infra story sounds exciting, it is important to dig deeper and be careful.

There will be only a few stocks that will benefit the most from the transformation what Tanushree calls the Rebirth of India.

You can read Tanushree's article in its entirety here: How to Profit from Modi 2.0's Rs 100 Lakh Crore Infrastructure Plan

In the news from the commodity space, crude oil was witnessing buying interest today and was set for its first weekly gains in five weeks.

Gains were seen on the back of tensions in the Middle East after Iran shot down a US military drone. Also, hopes of a drop in US interest rates by the Fed that may stimulate global growth fueled the momentum.

Market participants will be closely tracking crude oil prices in the coming weeks ahead of the OPEC meet. The members of the Organization of the Petroleum Exporting Countries (OPEC) have agreed to meet on July 1, followed by a meeting with non-OPEC allies on July 2 where they will discuss whether to extend a deal on cutting 1.2 million barrels per day of oil production that runs out this month.

Note that crude oil prices have quietly creeped up this year. Prices went up by around 40% from January 2019 to April 2019 as can be seen in the chart below:

As you know, rising crude oil prices have a big impact on the Indian economy as it imports over 70% of its energy needs.

Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening.

Research Analyst, Richa Agarwal believes that this has the potential to bring down sentiments in the domestic markets. She further believes that, if oil prices continue their upward march in a tight global environment, a broader correction in the sentiment fueled domestic market cannot be ruled out.

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

To know more about commodity and currency markets and which are the best counters to trade in this space, you can read one of Vijay Bhambwani's recent articles: Why Do I Recommend Trading Only Nickel, Crude oil, Gold, Copper, and USDINR?

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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