Sensex Opens Firm; Metal Stocks Rally

Fri, 13 Dec 09:30 am

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 1.2% while the Hang Seng is up 2.1%. The Nikkei 225 is trading up by 2.4%. Wall Street's main indices hit record highs on Thursday following news that the United States had reached a "deal in principle" with China to resolve a trade war that has rattled markets for nearly two years.

Back home, India share markets opened higher. The BSE Sensex is trading up by 229 points while the NSE Nifty is trading up by 62 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.5% and 0.4% respectively.

Barring telecom stocks and healthcare stocks, all sectoral indices have opened the day in green with metal and automobiles stocks witnessing buying interest.

The rupee is currently trading at 70.59 against the US$.

Speaking of the Indian share markets, the past few months have seen stock markets trading on a volatile note. While the Sensex has been rising, the rest of the market has seen most stocks falling. And even the Sensex's rise has been topsy-turvy.

But isn't that how markets have always behaved?

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 one of the editions 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 market movements to buy quality stocks?

Our smallcap stocks analyst Richa Agarwal talks about the ongoing economic slowdown, an upcoming rebound in the small cap space, and her number 1 stock pick for 2020 in the video below.

Tune in to find out more...

Moving on to the news from the economy. Rising food prices pushed the retail inflation in November to over three-year high of 5.54%, while the industrial sector output shrank for third month in a row by 3.8% in October, indicating deepening slowdown in the economy.

The retail inflation in November breached the Reserve Bank's medium-term target of 4%, justifying the central bank's decision to keep the benchmark interest rate unchanged in its monetary policy earlier this month.

According to the data released by the National Statistical Office (NSO), costlier vegetables, pulses and protein rich items pushed the consumer price index (CPI) based retail inflation to a 40-month high in November.

The previous high was in July 2016, when retail inflation was at 6.1%. The print stood at 4.6% in October and 2.3% in November 2018.

Inflation in vegetables shot up to 36% in November, as against 26.1% in October.

Prices of pulses and related products jumped 13.9% during the month. In the fuel and light category, prices dropped 1.9%.

On the other hand, the falling output of manufacturing, mining and electricity sectors pulled down the Index of Industrial Production (IIP) in October, as per the official data.

Notably, the Indian economy grew at the slowest pace in over six year at 4.5% during the second quarter of the current fiscal. The GDP growth remained at 5% in the first quarter ended June.

Volatile markets and some recent economic numbers have confused investors.

In this video, Tanushree Banerjee decodes a few economic myths and reveals three big trends of Rebirth of India.

Tune in...

Moving on to the news from the engineering sector. As per an article in a leading financial daily, Larsen & Toubro has bagged an order in the range of Rs 10 billion - Rs 25 billion from Rail Vikas Nigam.

The order entails construction of Rishikesh, Karanprayag Tunnel 2 package works comprising tunnels, bridges and formation works in the state of Uttarakhand.

L&T's heavy civil infrastructure division will execute this order.

The company stated that, this is a fast track project to be completed within stringent timelines.

Notably, diversification continues to help L&T negotiate and get better terms and margins for projects. Apparently, this is because it is less desperate to win orders as compared to a company which are present in only a couple of sectors.

Its reputation, extensive technical prowess, and large skilled workforce have enabled L&T to command a certain premium from customers and vendors alike.

Whether, further addition to these new projects provides a cushion to its profitability will be an interesting thing to watch out for going forward.

To know more about the company, you can access to L&T's Q2FY20 result analysis and L&T's 2018-19 Annual Report Analysis on our website.

L&T share price opened up by 0.6%.

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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