Sensex Opens Flat; Automobile & Healthcare Stocks Drag

Mon, 7 Oct 09:30 am

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Asian share markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is down 0.3% while the Shanghai Composite is trading on a flat note.

Back home, India share markets opened on a flat note. The BSE Sensex is trading down by 4 points while the NSE Nifty is trading down by 21 points. Both, the BSE Mid Cap index and BSE Small Cap index opened down by 0.7%.

Barring telecom stocks, all sectoral indices have opened the day on a negative note with capital goods stocks, healthcare stocks, and automobile stocks witnessing maximum selling pressure.

The rupee is currently trading at 71.08 against the US$.

The domestic currency declined in the early trade today and opened lower by 8 paise at 70.96 per dollar versus Friday's close of 70.88.

On Friday, the rupee closed almost flat after the Reserve Bank of India in a widely expected move cut key interest rates by 25 basis points.

According to the depositories data, foreign investors pulled out Rs 29.5 billion from equities and Rs 9.8 billion from debt segment on a net basis in just three trading sessions of October.

This follows a net investment of around Rs 78.5 billion by foreign portfolio investors (FPI) into equities in September.

In the last week of September, the government had slashed corporate tax rate by around 10 percentage points and also clarified that the enhanced tax surcharge will not apply on capital gains arising from sale of any security, including derivatives, in the hands of FPIs.

Besides, the markets regulator has simplified know-your-customer (KYC) requirements for FPIs and granted them permission to carry out off-market transfer of securities.

Note that foreign investors have been net sellers in 27 out of the last 61 months. Even in the ongoing financial year, foreign investors have been net sellers.

Will that change after the latest announcement by the Finance Minister?

Research analyst at Equitymaster, Ankit Shah believes that corporate tax cuts have the potential to revive the business and investment climate in the economy.

In his premium newsletter Insider, Ankit focuses on cherry-picking the best investing opportunities. Even after the jump in stock prices on Friday, many stocks are still trading below their best buy prices.

He believes, the best strategy in the current market is to accumulate quality stocks in a staggered manner as and when prices are attractive.

Moving on, Cox & Kings share price is in focus today. The Kolkata Police has launched an investigation against the company in a cheating and misappropriation case for allegedly collecting an amount of Rs 400 million from around 75 people "on the pretext of conducting overseas tours."

As per an article in The Economic Times, enquiry reveals that the company has collected the amount of Rs 400 million for conducting tours in different countries on the basis of their reputation but neither fulfilled the commitment nor returned the booking money.

Here's an excerpt from the article:

• A case has been registered against the directors and promoters of the company Cox & Kings limited on the complaints lodged by Camelia Dutta and others.
  
  The complaint against the company was registered at the Shakespeare Sarani police station under sections of the Indian Penal Code for criminal breach of trust, cheating and criminal conspiracy.

The company has allegedly shut down its Russel Street office and given notice of its inability to conduct overseas tours. There are also reports that the company has asked 2,000 employees to resign pleading helplessness in paying their due salaries for three months.

It is interesting to note that the stock of Cox & Kings has been a falling knife in the last few years. The stock is down more than 80% in the last 5 years.

Whereas, the stock that we recommended in Smart Money Secrets has been a consistent performer.

Just have a look at the chart below.

Divergence in Stock Performance

As Sarvajeet Bodas writes in a recent edition of The 5 Minute WrapUp...

• No wonder, Cox & Kings share price has lost 87% since 2018 and fallen 78% since the beginning of this year.
  
  Sure, the travel & tourism industry has a great runway for growth ahead.
  
  India is likely to become the third-largest tourism economy in the next 10 years. Not to mention, all the key triggers are in place for this industry to take off.
  
  Rising disposable incomes. A rapidly expanding the middle class. Urbanisation. Easy access to technology. The expansion of budget airlines.
  
  However, to ride this industry tailwinds, your side-car investing journey has to be in the company with a strong track record, ethical management and strong financials.

In Smart Money Secrets, we prefer companies which are run by excellent management, showing prudent capital allocation, businesses which have scalability, and a competitive advantage.

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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