Indian Stock Markets Open Flat; Telecom Stocks Lag

Tue, 24 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 flat while the Hang Seng is down 0.3%. The Nikkei 225 is trading down by 0.1%. Wall Street's main indices posted record closing highs on Monday after President Donald Trump said an initial US-China trade pact would be signed soon, while Boeing gave the Dow a big boost after the plane maker ousted its chief executive officer.

Back home, India share markets opened flat. The BSE Sensex is trading down by 16 points while the NSE Nifty is trading down by 2 points. The BSE Mid Cap index and BSE Small Cap index opened the day up 0.2% and 0.1% respectively.

Sectoral indices have opened the day on a mixed note with automobiles stocks and metal stocks witnessing buying interest. Telecom stocks are trading in red.

The rupee is currently trading at 71.21 against the US$.

The rupee depreciated by 6 paise to close at 71.18 against the US dollar on Monday amid muted activity in domestic equities and steady rise in crude oil prices.

Reportedly, the rupee traded in a narrow range amid lack of cues from the global market.

At the interbank foreign exchange market, the domestic currency opened weak at 71.15 and later fluctuated between a high of 71.11 and a low of 71.24.

The domestic unit finally settled at 71.18, showing a fall of 6 paise over its previous close of 71.12 on Friday.

Speaking of currencies, Vijay Bhambwani, editor of Weekly Cash Alerts, tells you the main reasons why not to trade commodities and currencies the same way you would trade equities. Here's an excerpt of what he wrote...

• Currencies are traded in pairs and the most liquid is the USDINR. Currencies are traded in four decimal points just as bonds are. The international derivative trader's association has indicated that forex may be traded in 6 decimals in the coming few years.
  
  It takes months sometimes for the currency pair to pass the next round figure, say from 70 to 71.
  
  Can you really trade commodities and currencies alike or for that matter, equities and currencies alike? Definitely not!

To know more, you can read Vijay's entire article here: Is Trading in Equities, Commodities, and Currencies the Same?

Moving on the news from commodities space. Gold prices today held steady near a more than one-week high hit in the previous session, as disappointing US data and concerns about an interim Sino-US trade deal supported the safe-haven metal in holiday-thinned trade.

Spot gold was unchanged at US$1,485.2 per ounce. Prices hit their highest since December 12 at US$1,485.9 on Monday. US gold futures were flat at US$1,489.2 per ounce.

New orders for key US-made capital goods barely rose in November and shipments fell, suggesting business investment will probably remain a drag on economic growth in the fourth quarter, data on Monday showed.

Speaking of gold, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

• "In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment."

Meanwhile, Vijay Bhambwani talks about how gold has been relied upon by humankind for 3000 years in one of his videos.

If you consider street inflation, your fixed deposits are giving negative yields. In times like these, Vijay considers gold as a safe haven.

So, is it the time to buy gold?

Tune in to find out...

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

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