Falling Gold Prices, Franklin Templeton Fiasco, and Top Buzzing Stocks Today

Wed, 25 Nov Pre-Open

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On Tuesday, Indian share markets witnessed positive trading activity throughout the day and ended on a strong note.

Both the benchmark indices logged their respective fresh lifetime highs in intra-day deals, with the NSE Nifty index hitting 13,000 for the first time ever.

At the closing bell yesterday, the BSE Sensex stood higher by 446 points (up 1%).

Meanwhile, the NSE Nifty closed higher by 129 points (up 1%).

Axis Bank and HDFC Bank were among the top gainers.

On the sectoral front, gains were largely seen in the banking sector, automobile sector and finance sector.

Here are Top 5 Factors Why Indian Stock Markets Rallied Yesterday

Vaccine Progress: AstraZeneca said its Covid-19 vaccine, cheaper to make, easier to distribute and faster to scale-up than its rivals, could be as much as 90% effective.

Improving Business Activity: US business activity expanded at the fastest rate in more than five years in November led by the quickest pickup in manufacturing since September 2014, fueling optimism of a swift recovery.

Positive Global Markets: Asian shares edged higher today as progress in developing an inexpensive coronavirus vaccine boosted hopes of a swift global economic recovery while European shares gained as a possible easing of lockdowns in France added to a brighter mood from encouraging developments related to coronavirus vaccines.

Banking Stocks Rally: Stocks from the banking sector witnessed huge buying interest today with the Nifty Bank index rising as much as 2.5%. Axis Bank, HDFC Bank, SBI, ICICI Bank and Kotak Mahindra Bank gained in the range of 2-4%.

FII Inflows: Foreign institutional investors continued to pour in money into Indian share markets. FIIs invested nearly Rs 510 billion in the month of November, which is the highest every monthly flow into Indian equities.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of stock markets, in her latest video, Co-head of Research at Equitymaster, talks about yet another stock like ITC, that has underperformed in recent months.

She talks about Mahindra & Mahindra (M&M), the ITC of the auto sector. In the video, Tanushree also explains whether M&M has upside from the perspective of growth or value?

Tune in to the video to find out more:

Top Stocks in Focus Today

Adani Ports and Special Economic Zone will be among the top buzzing stocks today.

Adani Ports and SEZ share price said it ranked 14th in the transportation and transportation infrastructure sector of Dow Jones Sustainability Emerging Markets Index, 2020.

Adani Ports is the only company from India to have been included in this sector.

Mindtree share price will also be in focus today as the company has signed a five-year deal with leading wind turbine maker, The Nordex Group to simplify, modernize and transform the company's entire IT landscape globally while providing scalability to support its growth plans.

Market participants will also track Motherson Sumi share price.

Motherson Sumi, India's biggest auto-component manufacturer, is pursuing multiple buyout deals, some of which will be made public in the final quarter of the year.

The buyouts are a part of the company's vision of tripling revenues by FY25 to US$ 36 billion from US$ 12 billion under the Vision 2025 plan.

Since 2002, Motherson Sumi Systems (MSSL) has made 24 acquisitions in the automotive and non-automotive segments, with the latest being the business assets of Bombardier's Mexico unit.

Franklin Templeton Fiasco

In news from the mutual funds space, Franklin Templeton Mutual Fund has moved the Supreme Court (SC) against the Karnataka High Court (HC) order that upheld the view that unitholders' consent is a must before wind-up of any mutual fund (MF) scheme.

Sanjay Sapre, President, Franklin Templeton MF said that post the judgement of the Karnataka HC, Franklin Templeton MF considered all possible options over the last few weeks to start returning money to unitholders in the shortest possible time in an orderly manner. This included the option of seeking unitholder consent according to the judgment of the Hon'ble High Court.

The development comes as last month, the Karnataka HC held the view that unitholders' consent was a must to wind up any MF schemes.

In the 333-page order, the High Court examined various aspects of the matter including the role of the Indian stock market regulator and trustees in Franklin Templeton's decision to wind up six of its debt schemes. A large part of HC's order was related to the existing regulatory guidelines for winding up any mutual fund scheme.

As of November 13, 2020, Franklin Templeton's six shut schemes have received total cash flows of Rs 96.8 billion, since April 24, 2020.

The cash available stands at Rs 59.5 billion as for the four cash-positive schemes, subject to fund-running expenses.

Among individual schemes, Franklin India Ultra Short Bond Fund and Franklin India Low Duration Fund have 43% and 27% of their assets in cash. Franklin India Dynamic Accrual Fund and Franklin India Credit Risk Fund have 26% and 8% of their assets in cash.

Last week, Franklin Templeton Mutual Fund said its six shut schemes have received Rs 9.4 billion from maturities, pre-payments and coupon payments in a fortnight.

On April 23, Franklin Templeton shut six debt mutual fund schemes, citing redemption pressures and lack of liquidity in the bond market, following the Covid-19 outbreak.

According to estimates, around 3,00,000 investors are impacted by Franklin Templeton's move to wrap up six of its yield-oriented debt schemes.

Speaking of the Franklin Templeton fiasco and mutual funds, Ajit Dayal, founder of Quantum group, talks about the corruption in the Indian mutual fund industry, in one of his articles. You can read the same here: Black swans, Black crows and Fund lies

Vijay Bhambwani also recorded a video on the analysis of the above situation and his recommendation for debt fund investors. You can check the same here: What the Franklin Templeton Fiasco Means for Traders

Gold Prices Fall on Vaccine Optimism

In news from the commodity space, domestic gold and silver prices fell sharply on Tuesday, continuing their weak trend of recent weeks.

Gold prices for the latest contract on MCX fell as much as 1.7% to Rs 48,650 per 10 grams.

Silver also faced selling pressure as it tumbled by Rs 1,588 to Rs 59,301 per kg from Rs 60,889 per kg in the previous trade.

On Monday, gold prices had slumped Rs 750 or 1.5% per 10 gram while silver had tumbled Rs 1,628 or 2.6% per kg.

In global markets, gold rates dropped to the lowest level in four months amid optimism over Covid-19 vaccine developments.

After hitting a record high of Rs 56,200 in August, gold prices have slumped amid vaccine progress and the recent outflow from gold-backed exchange-traded funds.

Speaking of gold, in one of his videos, India's #1 trader, Vijay Bhambwani talks about whether you should buy gold now. Vijay shares what implications the recent fall in gold prices could have for gold as an investment.

Tune in here to find out more:

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

India's Solar Power Tariffs Hit New Record Low

India's solar power tariffs hit a new record low of Rs 2 per unit during a bid conducted by state run Solar Energy Corporation of India (SECI).

The previously lowest recorded solar tariff in the country was of Rs 2.36 per unit.

Saudi Arabia' Aljomaih Energy and Water Company and Singapore headquartered Sembcorp's India arm' Green Infra Wind Energy placed the winning bids of Rs 2 per kilowatt-hour (kWh) to win the contracts to build 200 MW and 400 MW of solar projects respectively.

State run NTPC placed the second lowest winning bid of Rs 2.01 per unit to secure the balance 470 MW capacity.

The bids comes in the backdrop of fund-starved state electricity distribution companies (discoms) unwilling to sign contracts with intermediary procurers such as SECI for these previously-awarded projects at a comparatively higher tariff.

Due to the recent low-price bids, the discoms are tariff-shopping and are reluctant to ink power supply agreements (PSAs) for these projects.

We will keep you updated on the latest developments from this space. Stay tuned.

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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