Sensex Opens Higher Ahead of RBI Policy Decision; Tata Motors & Tata Steel Surge 4%

Fri, 8 Oct 09:30 am

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Asian stock markets are trading on a positive note today as concerns eased about the US debt ceiling and an energy crunch.

The Nikkei and the Shanghai Composite are trading up by 2% and 0.3%, respectively. The Hang Seng is trading down by 0.2%.

In US stock markets, Wall Street indices rose on Thursday for a third straight day, as lawmakers neared an agreement that would avert a debt-ceiling breach for at least two months.

Some investors attributed the market's bullish complexion to optimism around job creation ahead of a closely watched labour-market report on Monday.

The Dow Jones Industrial Average rose 338 points, or 1%. Meanwhile, the technology-focused Nasdaq Composite Index finished up by 152 points, or 1.1%.

Back home, Indian share markets have opened on a positive note.

Market participants are closely keeping an eye on RBI policy outcome due later today. The Central Bank will have a say on policy normalisation, GDP growth, inflation trajectory, and G-SAP quantum.

That apart, IT stocks will also be in focus with TCS scheduled to announce its earnings at 7 PM tonight.

The BSE Sensex is trading up by 218 points. Meanwhile, the NSE Nifty is trading higher by 86 points.

Tata Steel and M&M are among the top gainers today. HCL Tech, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index have opened higher by 0.5% and 0.6%, respectively.

Barring realty, all sectoral indices are trading in green with stocks in the automobile sector and metal sector witnessing most of the buying.

Shares of Atul and SKF India hit their 52-week highs today.

The rupee is trading at 74.91 against the US$.

Gold prices are trading up by 2% at Rs 46,910 per 10 grams.

Meanwhile, silver prices are trading down by 0.4% at Rs 60,995 per kg.

Gold held steady today as investors stayed away from making big bets ahead of the US non-farm payrolls report that is considered key to the Federal Reserve's stimulus taper timeline.

On Thursday, gold prices fell for the second time in three days as a stronger dollar put pressure on global prices.

Fed Chairman Jerome Powell had signalled last month there was broad agreement among policymakers to begin reducing the central bank's monthly asset purchases as soon as November, as long as the September jobs report was decent.

Reduced stimulus and higher interest rates lift bond yields, translating into increased opportunity costs of holding gold that pays no interest.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best performing commodities this year to combat the fallout from the coronavirus pandemic.

In news from the energy sector, BPCL is among the top buzzing stocks today.

As per a leading financial daily, the market regulator is unlikely to give exemption to the company acquiring BPCL from making mandatory open offers for Petronet LNG and Indraprastha Gas share purchases which will be countered by other promoters of the two firms such as GAIL to save from going private.

BPCL holds 12.5% of the shareholding in Petronet LNG and a 22.5% stake in Indraprastha Gas (IGL). It is a promoter of both the listed companies and holds board positions.

As per the legal position evaluated by the Department of Investment and Public Asset Management (DIPAM), the acquirer of BPCL will have to make open offers to the minority shareholders of Petronet and IGL for the acquisition of 26% shares.

To avoid this, a request was laid in front of markets regulator which officials are saying is unlikely.

If the open offers are successful, the acquirer of BPCL would also become the largest shareholder in Petronet (12.5% of BPCL plus 26% from the public) and get a controlling holding in IGL (22.5% of BPCL and 26% from public).

The government's 52.98% stake in BPCL is valued at about Rs 518 bn at the current share price.

Vedanta and private equity firms Apollo Global and I Squared Capital's arm Think Gas are in the race to buy the government's stake in BPCL.

BPCL share price has opened the day up by 0.6%

Speaking of the stock market, India's #1 trader Vijay Bhambwani explains what the energy crisis is about, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

Moving on to news from the pharma sector, Piramal Enterprises (PEL) on Thursday said its board has approved a composite scheme of arrangement providing for the demerger of its pharma business and simplification of the corporate structure to create two listed entities in financial services and pharma.

The company said shareholders will be issued 4 shares in demerged entity for every 1 held in Piramal Enterprises.

The pharma business will get demerged from Piramal Enterprises and consolidated in Piramal Pharma.

The amalgamation of PHL Fininvest with PEL will create a listed non-banking financial company (NBFC).

The merged housing finance company, post DHFL acquisition, will remain a 100% subsidiary of Piramal Enterprises.

Piramal Enterprises share price has opened the day down by 0.7%.

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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