Sensex Tanks 900 Points Tracking US Inflation Data, Nifty Below 17,350; Consumer Durables & IT Stocks Bleed

Fri, 11 Feb 10:30 am

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Asian stock markets are lower today, following a sell-off on Wall Street fueled by a forecast-beating US inflation reading that fanned fears the Federal Reserve will hike interest rates sharply.

The Hang Seng is down 0.1% while the Shanghai Composite is up 0.2%.

In US stock markets, Wall Street indices ended sharply lower on Thursday after US consumer prices data came in hotter than expected.

US Labor Department data showed consumer prices surged 7.5% last month on a year over year basis, topping estimates of 7.3% and marking the biggest annual increase in inflation in 40 years.

The Dow Jones Industrial Average fell 1.5%, while the S&P 500 lost 1.8%. The tech heavy Nasdaq Composite dropped 2.1%. It was the seventh time in 2022 that the Nasdaq lost more than 2% in a session.

Back home, Indian share markets are trading deep in the red, as US inflation data triggered fresh worries around interest rate hikes.

In line with soured global sentiment on high inflation data, benchmark indices started on a weak note, a day after RBI's dovish policy had calmed the markets.

Market participants are tracking shares of ONGC, Divis Lab, Apollo Hospitals, Motherson Sumi Systems, and Voltas as these companies will announce their December quarter results today.

The BSE Sensex is trading down by 865 points. Meanwhile, the NSE Nifty is trading lower by 254 points.

M&M is among the top gainers today. Infosys and Tech Mahindra, on the other hand, are among the top losers today.

Broader markets are faring in line with benchmark indices. The BSE Mid Cap index is down 1.2% while the BSE Small Cap index plunged 1%.

All sectoral indices are trading in red with stocks in the IT sector, FMCG sector and consumer durables sector witnessing most of the selling.

Shares of Hindalco and RHI Magnesita hit their 52-week highs today.

The rupee is trading at 75.33 against the US$.

Gold prices are trading down by 0.4% at Rs 48,752 per 10 grams.

Meanwhile, silver prices are trading down by 1.1% at Rs 62,600 per kg.

Gold slipped today as a stronger-than-expected US inflation reading and hawkish comments from a Federal Reserve official ramped up odds for a hefty interest rate hike next month, sending Treasury yields higher.

Crude oil prices eased as investors await the outcome of US-Iran talks that could lead to increased global crude supply.

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The below video is all about how to safeguard yourself from being cheated by unscrupulous people and ensure peace of mind.

In news from the insurance sector, the board of Life Insurance Corporation (LIC) is set to meet today to consider the insurer's proposed listing, setting the stage for the India's biggest initial public offering (IPO).

The draft red herring prospectus (DRHP) for the proposed IPO will be filed after the board approval. Other key decisions on how much discount will be offered to policyholders in upcoming issue may also get cleared in the meeting today.

As per reports, LIC can offer as much as a 5% discount to its policyholders and reserve up to 10% of the issue size for them.

The government is likely to offload around 5-10% stake in LIC, depending on its valuation.

The insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) yesterday gave its clearance to the listing of LIC. A formal letter for this is awaited though.

Foreign investors will be able to participate in LIC's IPO with the government looking to make changes to the foreign direct investment regime ahead of the public listing.

Note that a record 34 lakh demat accounts were opened in January 2022, and it may be another record in February as all brokers are racing to get LIC policyholders on board.

As per the latest data from two depositories NSDL and CDSL, the total number of demat accounts as of January 2022 has risen to 84 m compared with 80 m as of December 2021. Currently, there are more than 250 m LIC policyholders.

Surely, the enthusiasm for the LIC IPO is strong due to lot of initiatives taken by government. It remains to be seen how the IPO sails through.

To know more about the IPO, check out our recent article: LIC IPO is Around the Corner. Here's what we Know...

Speaking of the insurance sector, have a look at the chart below which shows the investment assets of non-life insurers and life insurers over the past 10 years:

Investment Assets of Non-Life Insurers 11x That of Life Insurers

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, the above chart is enough proof of how big an earning opportunity is the zero-cost float to the non-life insurers. Their investment assets under management is nearly 11 times that of life insurers.

Moving on to stock specific news...

Alembic Pharma is among the top buzzing stocks today.

Drug maker Alembic Pharma on Thursday reported Rs 1.8 bn net profit in December 2021 quarter, 40% lower compared to the corresponding period of previous year.

The pharma company's revenues dropped 3% year on year (YoY) to Rs 12.7 bn compared to Rs 13.2 bn last year.

Earnings before interest, tax, depreciation and amortization (EBITDA) declined 33% to Rs 2.7 bn while EBITDA margins stood at 21%.

The company's domestic formulation business that constitutes 39% revenues rose 17% to Rs 4.9 bn in December 2021 quarter. Meanwhile, the US business that constitutes 31% declined 23% YoY to Rs 3.9 bn.

In an exchange filing, the company said that its India business is going to grow faster than represented market, due to the initiatives they have taken in last few years and the Omicron coming up. Also, some of the Covid related therapies like Azithromycin have seen sharp uptake in January.

The company's MD Pranav Amin said that Alembic will launch 5 products in the current quarter, and will be reaching its target of 20 launches.

Alembic Pharma share price is currently trading down by 1%.

To know more, check out Alembic Pharma's 2020-21 annual report analysis.

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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