Sensex, Nifty Open Lower; Rupee Weakens Past 72-Mark

Fri, 23 Aug 09:30 am

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Asian share markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.2% while the Hang Seng is up 0.5%. The Shanghai Composite is trading up by 0.5%. Meanwhile, the benchmark S&P 500 ended little changed on Thursday as a fall in US jobless claims offset data showing a contraction in US manufacturing activity while investors awaited Federal Reserve Chair Jerome Powell's speech on Friday for clues on the central bank's monetary policy.

Back home, India share markets opened on a negative note yet again. The BSE Sensex is trading down by 223 points while the NSE Nifty is trading down by 58 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.7% and 0.8% respectively.

Except IT stocks, all sectoral indices have opened the day on a negative note with bank stocks and realty stocks witnessing selling pressure.

Speaking of stock markets in general, the market is typically focused on the most recent star performers.

You will often find the likes of HUL or HDFC Bank being the market darlings for never having a disappointing quarter.

But it is rare to find companies that thrive through most of their survival period.

Tanushree Banerjee shares few of her thoughts on this. Here's an excerpt of what she wrote in today's edition of The 5 Minute WrapUp...

• It is rare to find companies that survive for decades. It's even rarer to find ones that thrive through most of their survival period.
  
  So, if you do not wish to pay steep valuations for the market darlings, you need to look for the companies with history and consistency on their side.
  
  And they shouldn't be too conspicuous to the market either.
  
  I am talking of companies like Hawkins and City Union Bank. They have a track record of paying dividends for decades.
  
  The dividends such companies pay are especially helpful at a time when globally interest rates are headed lower.

And, as seen in the chart below, 'risk-free returns' from debt seem to have gone missing.

Inflation Adjusted Risk Free Returns Are Negligible Globally

Moving on, the rupee is currently trading at 72 against the US$.

The Indian rupee on Thursday plunged to an over eight-month low of 71.81, dropping 26 paise against the US dollar as tumbling equities and incessant foreign fund outflows weighed on sentiment.

Also, the sudden drop in Chinese yuan led to increased volatility in emerging market currencies, including the rupee, the reports noted.

At the interbank foreign exchange, the Indian currency opened weaker at 71.65 a dollar and went on to touch the day's lowest level at 71.97. It finally settled at 71.81, down 26 paise against the American currency.

This was the lowest level for the rupee since December 14, when it had closed at 71.90.

On Wednesday, the Indian rupee had closed at 71.55 a dollar.

Bringing the rupee under more pressure, the global crude benchmark Brent Futures rose 0.8% to trade at US$60.75 per barrel on Thursday.

Adding to rupee woes, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.02% to 98.31.

The 10-year Indian government bond yield was down at 6.6% on Wednesday.

Meanwhile, foreign investors pulled out Rs 9 billion from Indian equities on Thursday, as per the reports.

Vijay Bhambwani, the editor of Weekly Cash Alerts, had pointed out last week that the rupee will fall further.

In the video below, Vijay explains what's behind the fall in rupee and how much can it fall further.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Glenmark Pharma is engaged in discussions with private equity fund PremjiInvest to sell 25-30% stake in Glenmark Life Sciences (GLS), the newly hived off subsidiary of active pharmaceutical ingredient (API) products.

Reportedly, talks with PE funds have taken place in the backdrop of its ongoing discussions with home grown PE fund True North getting stuck over a valuation mismatch.

Glenmark plans to sell a minority stake for US$150 million, valuing the business at US$600-700 million.

Glenmark Life Sciences is primarily engaged in manufacturing and marketing of API products across all major markets globally. It also includes captive sales (use of API by GPL for its own formulations). It has four dedicated API manufacturing facilities, of which three are approved by the USFDA.

As part of reducing its piled-up debt, Glenmark had hived off noncore businesses into new subsidiaries with stake dilution plans, the reports noted.

Glenmark Pharma share price opened the day down by 1.3%.

To know more about the company, you can access to Glenmark Pharma's latest result analysis and Glenmark Pharma's Stock Analysis on our website.

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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