Sensex Opens Lower Tracking Weak Global Cues; L&T Slips 4% Post Q2 Results

Thu, 29 Oct 09:30 am

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Asian share markets are trading on a negative note today. The Nikkei is trading down by 0.7% and the Hang Seng is trading lower by 1%.

In US, Wall Street indices continued their sell-off and closed sharply lower on Wednesday in what is shaping up to be their worst week since late March, as rising coronavirus infections shook investors' confidence in the global economic recovery.

The Dow Jones Industrial Average fell 3.4%, while the Nasdaq slumped 3.7%.

Back home, Indian share markets have opened on a negative note, tracking weak global cues.

Market participants are tracking Maruti Suzuki share price and BPCL share price as these companies are slated to announce their financial results for the September quarter today.

The BSE Sensex is trading down by 376 points. Meanwhile, the NSE Nifty is trading lower by 112 points.

Asian Paints is among the top gainers today. Tech Mahindra, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened down by 0.9%. The BSE Small Cap index is trading down by 1.3%.

All sectoral indices are trading on a negative note with stocks in the metal sector and capital goods sector witnessing most of the selling pressure.

The rupee is trading at 74.07 against the US$.

Gold prices are trading down by 0.2% at Rs 50,411 per 10 grams.

Speaking of stock markets, in her latest video, co-head of Research at Equitymaster, Tanushree Banerjee explains why the proposed Kotak Bank-IndusInd Bank merger has merit and urgency.

Tune in to the video to know the math behind this proposed merger.

In news from the engineering sector, Larsen & Toubro (L&T) is among the top buzzing stocks today.

L&T on Wednesday posted a consolidated profit of Rs 52.3 billion, a sharp jump of 118% year-on-year (YoY), for the quarter ended 30 September.

The number is helped by Rs 81.5 billion as net profit from discontinued operations, referring to the sale of its electricals and automation business to Schneider Electric in August.

Profit before exceptional item stood at Rs 14.1 billion for the quarter, falling 44.7% compared to Rs 25.5 billion in same period last year.

The company recorded consolidated gross revenues of Rs 310.4 billion for the September quarter, a 12% YoY decline.

International revenue during the quarter was reported at Rs 121.5 billion, constituting 39% of the total revenue.

The company bagged orders worth Rs 280.4 billion at the group level during the quarter ended September 30, 2020 registering a sequential improvement of 19% over previous quarter, but a decline of 42% YoY.

The company's board also approved special dividend of Rs 18 per equity share i.e. 900% on face value of Rs 2 each, for the financial year 2020-21.

L&T share price has opened the day down by 4.2%.

Moving on, Tata Group stocks are in focus today.

Reportedly, Tata Group will invest Rs 50 billion to create a facility that will manufacture components for iPhone-maker Apple.

Tata Electronics, a new entity, was allotted 500 acres by TIDCO (Tamil Nadu Industrial Development Corporation) for the manufacturing plant at the industrial complex in Hosur.

Tata Group's investment in the facility might be hiked later, based on the level of sourcing, to as much as Rs 80 billion.

Titan Engineering and Automation (TEAL), a unit of Titan, will provide the expertise for setting up the production facility.

Note that yesterday, it was reported that Indian online grocery startup BigBasket is in advanced talks to sell a majority stake for about US$ 1 billion to Tata Group.

China's Alibaba, which holds around 26% stake in BigBasket, is expected to sell its entire shareholding in the company.

How this pans out remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

In other news, Tata Communications share price is also in focus today.

The company said it has partnered with Micron Technology for a cloud based e-SIM business to replace the existing physical SIM cards.

Reportedly, the e-SIM shipments are expected to start in the first half of next year.

"This solution will be powered by a new virtual SIM, the world's first cloud-based embedded subscriber identity module (eSIM), which offers a flexible, scalable alternative to conventional physical SIM cards," Tata Communications said in a statement.

To know more, you can read Tata Communications' latest result analysis on our website.

Speaking of Tata Communications, have a look at the chart below to see how the stock has performed over the past few years:

Here's what Tanushree Banerjee wrote about it in one of the editions of the Profit Hunter:

• What is the reason for this euphoria about the stock?
  
  Well, Tata Communication finds itself among the hallowed group of companies that are called 'Stay at-home' businesses today.
  
  In the US, stocks like Microsoft, Amazon, Facebook, Apple, and Netflix find themselves in this camp.
  
  These business are uniquely positioned among the essentials in a post Covid-19 world.
  
  This is simply because millions will now choose to work, shop, study, and carry out most activities without leaving their homes.
  
  Telecom and digital businesses no doubt have taken centerstage. Therefore, even a stock like Tata Communications, with no track record of profits, is trading at premium valuations.
  
  But if you ask me, this is a classic case of euphoria. Bull markets are known to thrive in such euphoria about stocks following the latest fad.

Earlier in June, Tanushree recommended a traditional Indian company to her StockSelect subscribers. The company is competing in the digital space with its latest offerings.

You can access the report here. (requires subscription).

And if you are not a StockSelect subscriber, here's where you can sign up.

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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