Sensex Ends 277 Points Higher; Capital Goods and Telecom Stocks Witness Buying

Tue, 6 Aug Closing

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Indian share markets witnessed buying interest throughout the day on hopes of a fourth consecutive 25 basis points rate cut by the Reserve Bank of India (RBI) tomorrow. The Sensex gained over 500 points intraday and traded above 37,200.

Sectoral indices ended on a mixed note with stocks in the capital goods sector, realty sector and telecom sector witnessing buying interest, while energy stocks and IT stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 277 points (up 0.8%) and the NSE Nifty closed higher by 86 points (up 0.8%). The BSE Mid Cap index ended the day up by 1.4%, while the BSE Small Cap index ended up by 1.7%.

Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng and the Nikkei were down 0.7%. The Shanghai Composite stood lower by 1.6%.

The rupee was trading at 70.80 to the US$ at the time of writing.

Speaking of Indian share markets, note that there's been a sharp correction witnessed in the small-cap segment since the Union Budget, with the BSE Smallcap index hitting its lowest level since February 2017.

But Richa Agarwal says this fall currently offers the best bargains to the market.

In the below video, she talks about picking right stocks to benefit from the upcoming rebound.

You can know more about small caps here: One Stock Crorepati, Best Stock to Buy, Falling Smallcap Stocks Smallcap Stocks Under Modi 2.0, and Crorepati stocks.

Market participants were tracking Nilkamal share price, Indiabulls Housing Finance share price, and Pidilite Industries share price as these companies announced their June quarter (Q1FY20) results today.

You can read our recently released Q1FY20 results of some other companies here: Ceat, Apollo Tyres, ITC, Nestle, Bata India.

Berger Paints share price was in focus today as the company posted a 31.7% year-on-year (YoY) increase in consolidated net profit to Rs 1.8 billion for the first quarter ended June 2019.

The company's revenue from operations during the quarter rose 15.9% to Rs 17.3 billion from Rs 14.9 billion in the corresponding quarter of the previous fiscal.

Berger Paints' total expenses rose 13.2% to Rs 14.6 billion from Rs 12.9 billion in the year-ago period.

Meanwhile, in a separate filing, the company informed that it is considering investment opportunities in Russia to complement its existing operations. However, the company said, no decision has been taken in this regard.

Dilip Buildcon share price was also in focus today as the company reported a 54.9% YoY fall in its consolidated net profit in Q1 June 2019.

The company's net sales were down 3.4% YoY and stood at Rs 24.3 billion.

On standalone basis, the company's net profit fell 50.9% YoY to Rs 1.2 billion on 6.1% YoY fall in net sales to Rs 22.8 billion.

The company's net order book as on 30 June 2019 stood at Rs 190.2 billion.

The company's 74.3% of the order book is constituted by roads and highways project, special bridge projects contribute 3.81%, mining contributes 14.4%, irrigation projects contribute 2.82%, metro projects contribute 2.2%, tunnel projects contribute 2.3% and urban development projects contribute 0.2%.

In the news from the automobile sector, as per industry experts, the recent draft notification by the Ministry of Road Transport and Highways, which proposes to increase the registration charge of new vehicles, is expected to further aggravate the slowdown in the automobile industry.

The draft notification proposes an increase in registration charges of new vehicles by 10 to 20 times, depending upon the vehicle category, from the present level.

As per the notification, new medium goods/passenger vehicles are proposed to attract a registration fee of Rs 20,000, instead of the current Rs 1,000.

The registration fee for a new truck or a bus has been proposed at Rs 20,000, as opposed to the current Rs 1,500.

The registration fee for two-wheelers is proposed to be Rs 1,000, instead of the current Rs 50 and similarly, the registration fee for a new car is proposed to be Rs 5,000, up from the present Rs 600.

Automobile industry body Society of Indian Automobile Manufacturers (SIAM) also expressed serious concerns for the above notification and said such increase in the registration charges of new vehicles would further aggravate the market condition negatively.

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

Speaking of the auto sector, note that the past months have been difficult for the auto sector owing to weak demand and liquidity issues. The sector expected some sops from the Union Budget. The Budget did address liquidity concerns in the system but failed to impress the industry with specific measures.

Auto manufacturers are now hoping for a normal monsoon and expect revival in sales as the liquidity crunch gets addressed.

Notably, the Indian auto sector is in the middle of a storm.

Passenger sales fell 20.5% in May 2019 compared to May 2018. This follows a 17.1% year on year decline in April as well.

Never Ending Woes For The Automobile Sector

The decline in May is the worst seen since 2001.

Multiple factors have affected the auto sector of late.

The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms... they have all taken their toll.

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

Maruti, India's largest car maker announced it would stop making diesel cars from April next year.

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.

Only the ones adapting their business models to the rapidly changing environment will survive and thrive.

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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