Sensex Trades 365 Points Lower; Dow Futures Down by 194 Points

Mon, 26 Oct 12:30 pm

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Share markets in India are presently trading on a negative note.

The BSE Sensex is trading down by 365 points, down 0.9%, at 40,320 levels.

Meanwhile, the NSE Nifty is trading down by 104 points.

Adani Ports & SEZ and HDFC Life are among the top gainers today . JSW Steel and Hero MotoCorp are among the top losers today.

The BSE Mid Cap index is trading down by 1%

The BSE Small Cap index is trading down by 0.4%

On the sectoral front, all sectors are trading in red with stocks from the metal sector and energy sector witnessing most of the selling pressure.

US stock futures are trading lower today, indicating a negative opening for Wall Street indices.

Nasdaq Futures are trading down by 56 points (down 0.5%), while Dow Futures are trading down 194 points (down 0.7%).

Gold prices are trading down by 0.4% at Rs 50,630 per 10 grams.

Note that in recent weeks, gold prices have remained in a narrow range, after losing momentum since hitting a record high of Rs 56,200 per 10 grams in August.

Yet, gold prices are up about 30% so far this year in Indian markets. Most of these gains are seen as gold is seen as an inflation hedge amid unprecedented pandemic-driven stimulus across the world.

To know more about gold, visit our YouTube Playlist on gold investing.

The rupee is trading at 73.75 against the US$.

Speaking of thestock markets, India's #1 trader Vijay Bhambwani talks about how there are better days ahead for the stock market in 2021 in his latest video for Fast Profits Daily.

In this video below, Vijay shares that since commodity prices have recovered along with the stock market, they are now pointing towards an economic recovery. Aluminium is at its highest after May 2019 and copper on the MCX is at a multi-year high as well.

So, does it mean that the stock market will go up now?

Tune in here to find out more:

Moving on to stock specific news...

Among the buzzing stocks today is Nestle India.

According to an exchange filing, FMCG giant, Nestle India reported a 10% year-on-year (YoY) increase in revenue for the quarter ended September.

The company's net sales rose on the back of improving demand in the first quarter of operations after the government eased lockdown curbs and its factories limped back to normal capacities.

Domestic sales rose 10.2% YoY while its exports rose 9.4% YoY to Rs 1.6 billion. The company also saw an increase of 15% YoY in its operating profit and an expansion of 1.1% in its operating margin.

However, the company saw its profit decline 1% YoY. This bottom line fell because the profit was boosted in the year ago quarter after the government cut corporate tax rates.

Nestle India's brands such as Maggi noodles and sauces, Kit Kat, and Nescafe witnessed double-digit growth. The company said that sales through its e-commerce channels almost doubled in the quarter and now contributes to 4% of Nestle India's domestic sales.

Note that the demand for consumer goods makers improved after the nation restarted most activities to boost sentiment. While a complete economic recovery is some time away, Nestle India's peers Hindustan Unilever and Britannia Industries also reported an increase in demand.

The company plans to invest Rs 26 billion over the next three to four years to expand its existing manufacturing capacities and start a new factory at Sanand, Gujarat.

The board of directors declared an interim dividend of Rs 135 per share which will be paid on and from 20 November 2020.

At the time of writing, Nestle India share price was trading up by 2.3% on the BSE.

Moving on to news from the metals and mining sector...

Vedanta Pays US$ 476 Million Dividend Before Potential Downgrade

According to an exchange filing on October 24, Vedanta, the Indian subsidiary of Vedanta Resources Ltd. (VRL), approved a dividend of Rs 9.5 per share amounting to Rs 35 billion (US$ 476 million). The outflow follows US$ 1.2 billion in payouts announced by cash cow unit Hindustan Zinc earlier this week.

The decision comes two weeks after the failure to delist Vedanta which has curtailed the London-based holding company's ability to easily access cash from its units and pare down elevated debt.

Moody's Investors Service put VRL's credit rating under review for a downgrade on October 27, citing an increase in refinancing risk at the holding company level following the collapse of the privatization bid.

VRL, which owns 50% in its Indian unit has around US$ 2.9 billion in debt maturities that are due between April 2020 and March 2022.

While the dividend payments and intercompany loans will be adequate for debt servicing over the next 12 months, the significant reduction in cash at the subsidiaries in this scenario would make subsequent debt maturities more challenging.

The payout will also come as a relief for Vedanta's minority shareholders, after the company didn't pass on a previous dividend by Hindustan Zinc to them in May

VRL's dollar bond maturing in 2024 surged 4.2 cents on the dollar, the biggest jump since June, on optimism that the dividend payout will ease concerns regarding repayments of the upcoming debt maturities.

We will keep you updated on all the news from this space. Stay tuned

Speaking of the metal sector, note that metal stocks have rebounded sharply from their March lows, with revival in both domestic and global demand.

Have a look at the chart below which shows returns of the major sectoral indices since 23 March 2020.

According to Apurva Sheth, Senior Research Analyst at Equitymaster, the secret behind the rally in metals is nothing else but its greed and fear cycle. The greed phase in metal stocks will last till September 2021.

As per Apurva, the sector has a lot more ground to cover up in a short span of time.

He has been sharing with you such greed and fear cycles in stocks, currencies, and even commodities.

How metal stocks perform in the coming months remains to be seen.

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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