Sensex Opens Lower; Metal and Banking Stocks Drag

Thu, 19 Sep 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 1% while the Hang Seng is up 1.1%. The Shanghai Composite is trading up by 0.1%. The S&P 500 ended marginally higher on Wednesday after Federal Reserve policymakers cut interest rates by a quarter of a percentage point, as expected, but gave mixed signals about their next move.

Back home, India share markets opened the day in red. The BSE Sensex is trading down by 160 points while the NSE Nifty is trading down by 52 points. The BSE Mid Cap index opened down by 0.2% while BSE Small Cap index opened flat.

Barring telecom stocks and consumer durables stocks, all sectoral indices have opened the day on a negative note with metal stocks and bank stocks witnessing maximum selling pressure.

The rupee is currently trading at 71.27 against the US$.

• "Be fearful when others are greedy and greedy when others are fearful." - Warren Buffett

You'll hear this often but how do you practice this?

How do you know when everyone is greedy or fearful?

Well, the media is one source. When you hear headlines predicting gloom and doom, pessimism is strong all around.

Google trends are an interesting source too.

Are We Close to Peak Pessimism in the Stock Market?

The keyword 'Multibagger' tends to peak when there is euphoria all round. The same keyword drops when there is pessimism.

'Multibagger' search term peaked in India in Jan 2018. Mid and small caps were at multi-year highs. Since then, Mid and small caps corrected by 26% and 37% respectively.

Similarly, 'Multibagger' search was at its lowest in August 2013. Mid and small caps were at multi-year lows. Then from 1 Aug 2013 to 15 Jan 2018, mid and small caps were up by 233% and 282% respectively.

Currently, 'Multibagger' search is at its lowest levels. Like in 2013, retail investors are dumping stocks and looking for other safe assets.

Will history repeat itself?

In the news from the oil & gas sector. Petrol and diesel prices were on Wednesday hiked by 24-25 paise per litre, the steepest increase since July 5 Union Budget.

This comes on the back of a fallout of turmoil in global oil markets following drone attacks on Saudi Arabian crude oil facilities.

Petrol price was increased by 25 paise per litre to Rs 72.42 and diesel by 24 paise to Rs 65.82 in the Delhi market, which is sort of a national benchmark.

This is the biggest single-day hike since the July 5 Budget of Finance Minister Nirmala Sitharaman that raised rates by almost Rs 2.50 a litre due to an increase in excise duty on the fuels.

The hike on Wednesday followed a 14 paise a litre increase in price of petrol on Tuesday and 15 paise per litre rise in diesel rate.

Following the drone strikes on Saturday, international oil prices rallied nearly 20% on Monday in intraday trading, the biggest jump in almost 30 years.

Rates have in subsequent two days retreated, conceding about half of the gains.

Brent crude future on Wednesday dipped 0.3% to US$64.4 per barrel after jumping to near US$72 in reaction to the disruption. US West Texas Intermediate (WTI) crude lost 0.5% to US$ 59.1 per barrel.

This came after signs that Saudi Arabia was quickly restoring production at Abqaiq facility.

So, what lies ahead for the oil prices?

In his latest video, Vijay Bhambwani addresses the conspiracy theories surrounding the Saudi drone attacks.

Did the Saudi's do it themselves to push up oil prices before Saudi Aramco's initial public offer?

Vijay's deep understanding and insights from this space makes you look at this burning issue from a different perspective.

Tune in...

Moving on to the news from the mining sector. As per an article in a leading financial daily, India plans to invite bids from global firms for the first time for coal mining blocks before end-2019.

Reportedly, this move could end Coal India's near monopoly for the fuel as the nation tries to cut imports.

Coal is among the top five commodities imported by India. Coal imports are surging after the government failed to open the industry to competition, despite having passed a liberalization policy 19 months ago.

As per the reports, the coal block auctions are intended to attract global miners such as Glencore PLC, BHP Group, Anglo American PLC and Peabody Energy Corp.

The government aims to allow companies with winning bids to begin development of the coal blocks which hold proven reserves by early 2020.

Note that, Coal India and a small stated-owned company are the only firms currently allowed to mine and sell coal in India. India does allow some power, steel, cement and aluminium companies to mine coal for their own captive use.

Now how this pans out going forward remains to be seen. Meanwhile, we will keep you updated on the developments from this space.

Mining stocks opened the day on a mixed note with Hindustan Zinc and MMTC leading the gainers.

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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