Sensex Opens Marginally Higher; Energy & Realty Stocks Lead

Wed, 16 Oct 09:30 am

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Asian share markets are higher today as Britain and the EU made headway on a Brexit deal ahead of a leaders' summit. Officials and diplomats involved in negotiations between the world's fifth-largest economy and its biggest trading bloc said that differences over the terms of the split had narrowed significantly.

The Shanghai Composite is down 0.3%, while the Hang Seng is up 0.1%. The Nikkei 225 is trading up by 1.3%.

Back home, India share markets have opened the day on a positive note. The BSE Sensex is trading up by 123 points while the NSE Nifty is trading up by 39 points. The BSE Mid Cap index and the BSE Small Cap index have opened the day up by 0.4%.

Sectoral indices have opened the day on a mixed note with stocks in the energy sector and realty sector witnessing buying interest, while metal stocks and FMCG stocks are trading in red.

The rupee is trading at Rs 71.66 against the US$.

Speaking of Indian stocks markets, the stock market has not been kind to investors of late.

There has been a sudden shift in market sentiment on the back of same major developments.

And investors across the rank and file - from institutional to retail - have been at the receiving end. The mayhem has spared no one.

But if you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

The Time to Buy Stocks is Now

Here's what Radhika Pandit wrote about this in a recent edition of The 5 Minute WrapUp...

• If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.
  
  Sarvajeet and I believe we are seeing a similar situation currently.
  
  The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

So, the real question is - Are you taking advantage of these price declines to buy quality stocks?

In news from the economy, the International Monetary Fund (IMF) on Tuesday, cut its estimate for India's growth this year to 6.1% from 7% projected in July, calling on the country to use monetary policy and broad-based structural reforms to address cyclical weakness and strengthen confidence.

In its latest World Economic Outlook, the IMF said that "India's economy is set to grow at 6.1% in 2019, picking up to 7% in 2020." It further added that the downward revision reflected a weaker-than-expected outlook for domestic demand.

Forecast for next fiscal has been cut to 7% from 7.2% estimated earlier.

As per an article in The Economic Times, India suffered the sharpest cut, next only to Saudi Arabia which saw a reduction of 1.7 percentage points to its growth forecast to 0.2% for 2019. China's growth forecast was cut 0.1 percentage point to 6.1% for 2019. The world economy is expected to grow by 3%, marginally lower than 3.2% projected in July.

Here's an excerpt from the article:

• In India, growth has softened on the back of corporate and environmental regulatory uncertainty with concerns about the health of the nonbank financial sector further weighing in.

Note that most agencies have cut growth estimated for India in view of the slowdown. The Reserve Bank of India (RBI) lowered its growth projection for the fiscal year to 6.1% from 6.9%.

The World Bank on Sunday lowered its forecast for the current fiscal year to 6%, down from 7.5% in April, and said the main policy challenge for the country is to address the sources of softening private consumption and the structural factors behind weak investment.

The economy grew at its slowest pace in six years at 5% in the June quarter. Industrial production contracted 1.1% in August, the worst performance in almost seven years.

To help revive the economy, the central bank has cut rates five times this year and the government has unveiled several measures including a reduction in corporate tax.

Note that the Indian stock markets have not been kind to investors of late. There has been a sudden shift in market sentiment on the back of some major developments.

And investors across the rank and file - from institutional to retail - have been at the receiving end. The mayhem has spared no one.

Amid all this, Tanushree Banerjee, in the video below, talks about the Rebirth of India phenomenon and how 3 specific trends are racing ahead even in these gloomy times.

Tune in to find out more...

Moving on to news from the IT sector, Wipro on Tuesday reported a 35.8% YoY rise in consolidated net profit at Rs 25.6 billion for the September quarter compared with Rs 18.9 billion in the corresponding quarter last year. On a sequential basis, the profit was up 6.2%.

Revenues came at Rs 151.3 billion, up 2.8% quarter-on-quarter. The dollar revenue for the IT services segment came at US$ 2.04 billion, marginally up 0.5% from US$ 2.03 billion in the previous quarter.

Operating margin for the IT services segment stood at 18.1%, an increase of 3.1% YoY.

The effective tax rate for the quarter was 18.3% compared with 21.8% in June quarter and 22.1% in the year-ago quarter.

The company also said it has concluded the share buyback of 323.1 million equity shares, which has resulted in a cash outflow of Rs 105 billion.

Wipro share price has opened the day up by 2%.

To know more about the company, you can read Wipro's Q2FY20 result 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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