Sensex Ends 84 Points Higher; Metal and Automobile Stocks Witness Buying

Wed, 31 Jul Closing

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After opening the day on a negative note, Indian share markets traded on a volatile note throughout the day and ended marginally higher.

Sectoral indices ended on a mixed note with stocks in the metal sector, automobile sector and oil & gas sector witnessing buying interest, while telecom stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 84 points and the NSE Nifty closed up by 33 points. The BSE Mid Cap index ended the day up by 0.7%, while the BSE Small Cap index ended up by 0.3%.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down 1.3% and the Shanghai Composite stood lower by 0.7%. The Nikkei 225 was down 0.9%.

The rupee is trading at 68.83 against the US$.

Market participants were tracking CARE ratings share price, IOC share price, and Trent share price as these companies announced their June quarter results today.

You can read our recently released Q1FY20 results: Force Motors, Maruti Suzuki, Vedanta, Tata Motors, Supreme Industries, Castrol India, Escorts, Tech Mahindra.

In news from the macroeconomic space, there has been only four occasions since 2002, when the foreign portfolio investor (FPI) outflow had surpassed the Rs 117.4-billion mark witnessed in July so far.

According to the NSDL data, the highest ever outflow came in the month of October, last year when foreign investors pulled out Rs 289.2 billion from India's equity markets.

India's July outflow is also the highest in the emerging markets followed by Brazil.

This indicates that the investors have started to shift to other economies which could yield higher returns.

The reason for this are many.

From slowdown in the economy to the Budget...

But, can the real reason be external?

In March this year, the Morgan Stanley Capital International (MSCI) announced it would increase the weightage of Chinese A shares (stocks trading in mainland China) by 4 times. These shares form around 10% of total Chinese shares in the index.

FPIs investing in passive funds follow the MSCI EM index for investments in emerging markets.

A comparison of India's weightage with China in the MSCI EM index provides us clues on the recent outflows from FPIs.

Will India be the Next Hot FPI Destination?

It also explains the announcement to reduce promoter shareholding in the budget.

Will we see a similar FPI inflow in to Indian stocks?

Looking at the recent inflow in to the Chinese stock markets, it seems very likely.

In the news from the banking sector, Allahabad Bank share price was in focus today as the lender received its board's approval to raise up to Rs 20 billion via qualified institutional placement.

This is part of the bank's plan to raise up to Rs 40 billion this fiscal to propel business growth.

Raising capital from qualified investors would help the bank pare government's stake from the current 92%.

The market regulator has given the bank two years' time till October 2020 to reduce promoter's holding to minimum 75%.

In the news from the automobiles sector, Hero MotoCorp share price surged over 4% after the company reported 38.3% YoY rise in its net profit at Rs 12.6 billion for the quarter ended 30 June 2019.

Eicher Motors share price was also in focus today ahead of the company's June quarter results today.

Speaking of the automobile space, the BSE Auto index is down 35% since the start of this year.

Multiple factors have affected the auto sector of late.

Also, this sector is ripe for disruption with electric vehicles and ride sharing applications.

The coming one year will be a real test for India's auto companies.

It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.

Richa Agarwal, editor of Hidden Treasure, believes that the companies which will adapt their business models to the rapidly changing environment will survive and thrive.

In fact, she has picked out 4 Rebound Stocks to profit from the market crash.

In the news from the commodity space, crude oil rose for the fifth day and witnessed buying interest today. Most of the gains were seen on the back of a bigger than expected drop in US inventories.

The American Petroleum Institute (API) on Tuesday reported a decrease of 6.024 million barrels in the US crude oil inventories for the week ending July 26.

In the previous week ending July 19, API reported a decrease of 10.961 million barrels of crude oil inventories, the largest draw this year.

Also, the US Energy Information Administration (EIA) reported a decline of 10.835 million barrels for the same period.

Further, expectations that the US Federal Reserve will cut interest rates meant the commodity trade on a positive note.

Note that crude oil has been witnessing volatility lately amid weekly declines in US inventories and rising geopolitical tensions between Iran and other countries.

Meanwhile, volatility was also seen on the back of ongoing geopolitical tensions in the Middle East.

Iran said that a small oil products tanker missing in the Strait of Hormuz was in its territorial waters. This stoked fraught relations with Iran's neighbors and the West over threats to shipping in the key oil chokepoint.

How this all pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Speaking of crude oil, in the video below, Vijay Bhambwani explains how trading in crude oil is an evergreen strategy. As per him, trading in crude oil offers excellent opportunities in nearly all market conditions due to its unique standing within the world's economic and political systems.

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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