Indian Stock Markets Open Flat; Telecom and Energy Stocks Lag

Mon, 23 Dec 09:30 am

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Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.6% while the Hang Seng is down 0.1%. The Nikkei 225 is trading flat. US stocks hit record closing highs again on Friday and the S&P 500 registered its biggest weekly percentage gain since early September after data showed a rise in consumer spending and investors continued to be optimistic about developments in the US-China trade dispute.

Back home, India share markets opened flat. The BSE Sensex is trading down by 46 points while the NSE Nifty is trading down by 5 points. The BSE Mid Cap index and BSE Small Cap index opened the day up 0.3% and 0.2% respectively.

Sectoral indices have opened the day on a mixed note with consumer durables stocks and metal stocks witnessing buying interest. Telecom stocks and oil & gas stocks are trading in red.

The rupee is currently trading at 71.17 against the US$.

Speaking of Indian share markets, in the video below, Tanushree Banerjee reveals the right metric to use to find out what the earnings really say about the stock market.

Tune in to find out.

In the news from the financial markets. Ignoring negative sentiments around falling GDP growth rate and some policy roadblocks, foreign portfolio investors seem to have flocked to the Indian capital market in a big way in 2019 with a net inflow of over Rs 1.3 trillion, including Rs 972.5 billion in equities, the highest in last six years.

As the year draws to a close, the debt market has seen a net inflow of nearly Rs 270 billion by FPIs, while a further amount of Rs 90 billion found its way to the hybrid instruments, the reports noted.

As of now, the foreign portfolio investors (FPIs) have made a net investment of Rs 1.3 trillion (nearly US$ 19 billion) in the Indian markets so far in 2019, while a few days of trading is yet to take place.

While FPIs have made gross purchases worth over Rs 18 trillion so far this year, they have sold securities worth Rs 16.7 trillion across equities, debt and hybrid instruments.

This is the second highest inflow in the last five years and follows a net outflow of close to Rs 810 billion in 2018. In 2017, the net inflow into Indian capital markets had crossed Rs 2 trillion after a net outflow of over Rs 230 billion in 2006.

For equities only, the year passing-by has already seen a net inflow of Rs 972.5 billion, the highest in six years. While the year 2018 saw a net outflow of over Rs 330 billion by FPIs in equities, there was a net inflow of Rs 510 billion in 2017, of Rs 205 billion in 2016, of Rs 178 billion in 2015 and of Rs 970.5 billion in 2014.

FPIs started the year on a negative note and pulled out over Rs 42 billion from equities in January, but turned net buyers in February and the positive momentum continued till June.

However, FPIs turned net sellers in July & August and pulled out over Rs 30 billion after the government announced a super-rich tax, which also impacted foreign funds.

Besides, global cues turned unsupportive. Further, brewing tension between US and Iran, an escalating US-China trade war and fears of slowing global growth created a risk-off sentiment, which did not augur well for emerging markets like India.

Reversing their selling spree, FPIs once again turned net buyers in September and the momentum continued till November after the government announced steps to boost the economy and spur investments.

FPIs would continue to be watchful of the domestic environment and tread cautiously. We will keep you updated on the developments from this space.

Note that, in March this year, the Morgan Stanley Capital International (MSCI) announced it would increase the weightage of Chinese A shares (stocks trading in mainland China) by 4 times. These shares form around 10% of total Chinese shares in the index.

FPIs investing in passive funds follow the MSCI EM index for investments in emerging markets.

A comparison of India's weightage with China in the MSCI EM index provides us clues on the recent outflows from FPIs.

It also explains the announcement to reduce promoter shareholding in the budget.

Will India be the Next Hot FPI Destination?

Will we see a similar FPI inflow into Indian stocks?

Looking at the recent inflow into the Chinese stock markets, it seems very likely.

Moving on the news from pharma sector. As per an article in a leading financial daily, Cadila Healthcare announced that the United States Food and Drug Administration (USFDA) cleared its Gujarat facility.

According to the report, the USFDA issued no observation (483) at the completion of the inspection that concluded on December 20.

The inspection was going on since December 16 at the company's topical manufacturing facility in Ahmedabad.

Issuance of no observation means that the company has successfully cleared the inspection on all aspects.

Cadila Healthcare share price opened the day up by 1.1%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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