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Sensex Ends 129 Points Lower; Energy and Finance Stocks Witness Selling


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Author at Equitymaster

Indian share markets continued to witness volatility during closing hours today and ended on a negative note.

At the closing bell, the BSE Sensex stood lower by 129 points (down 0.3%). The NSE Nifty closed lower by 28 points (down 0.3%).

The SGX Nifty was trading at 11,104, up by 4 points at the time of writing.

The BSE MidCap index ended up by 0.4%. The BSE SmallCap index ended up by 0.8%. On the sectoral front, losses were seen in the energy sector and finance sector.

Healthcare stocks, on the other hand, witnessed huge buying interest.

Asian markets ended on a mixed note. As of the most recent closing prices, the Hang Seng ended down by 0.47% and the Shanghai Composite stood up by 0.71%. The Nikkei ended down by 2.82%.

The rupee was trading at 74.83 against the US$.

Speaking of Indian stock markets, the markets are coming out of the deep fall. An important driver of this rally is the increasing inflow from foreign institutional investors now that the global economies have opened the liquidity tap.

A lot of this money is coming to the mid and smallcap stocks.

In her latest video, Richa Agarwal, lead smallcap analyst at Equitymaster, talks about a zero-loss strategy that maximizes returns in volatile stock markets.

Tune in here to find out more.

Moving on, State Bank of India (SBI) was among top buzzing stocks today.

The country’s biggest lender State Bank of India today reported a standalone profit of Rs 41.8 billion for the quarter ended June 2020. This meant a growth of 81.2% over a year-ago period and was driven by stake sale in life insurance business. Provisions and lower non-interest income, however, limited growth.

Net interest income (NII), the difference between interest earned and interest expended, increased 16.1% YoY to Rs 266.4 billion in June quarter.

In June this year, SBI sold 2.1% equity stake in SBI Life Insurance Company via offer for sale route to comply with shareholding norms and raised Rs 15.3 billion.

The provisions and contingencies at Rs 125 billion increased by 36.1% year-on-year (YoY) including additional provision of Rs 18.3 billion on account of COVID-19 related accounts, adhoc provision of Rs 16.1 billion with respect to wage revision and Rs 52.3 billion towards fraud accounts. However, provisions on sequential basis fell 7.4%.

SBI said its provisions only for non-performing assets at Rs 94.2 billion declined sequentially (down 20.8%) as well as year-on-year (down 19.1%) for the quarter ended June 2020.

Asset quality improved significantly in the quarter ended June 2020, with gross non-performing assets (NPA) as a percentage of gross advances falling 71 bps quarter-on-quarter (QoQ) to 5.44% and net NPA declining 37 bps QoQ to 1.86%.

State Bank of India has reported a sharp decline in fresh slippages at Rs 36.3 billion in Q1FY21, compared to Rs 81 billion in Q4FY20.

The moratorium was at 9.5% of total loan book at the end of June quarter, against 23% in March quarter.

Non-interest income fell 0.7% to Rs 79.5 billion during the quarter YoY, while pre-provision operating profit increased sharply by 24.7% to Rs 165.2 billion in Q1FY21 YoY.

Shares of Dabur were also in focus as the company reported a 5.9% year-on-year (YoY) fall in net profit at Rs 3.4 billion for the quarter ended June 2020. Revenue during the quarter declined 12.9% YoY to Rs 19.8 billion.

The company’s domestic volume in Q1FY21 fell at 9.7%.

Among products, Dabur Chyawanprash reported a growth of over 694% YoY during the quarter, while Dabur Honitus grew by over 80% YoY. Dabur Honey ended Q1 with a growth of over 60%.

During the quarter ended June, Dabur introduced a record number of new products and variants anchored on the consumer need for health, immunity and hygiene.

Moving on to the news from commodity space…

Gold prices witnessed buying interest today and went on to touch new record highs.

On MCX, gold futures prices in India showed an upsurge of 0.88% to Rs 53,452 per 10 grams today. In the previous session, gold was down 0.42%.

In the international markets, the yellow metal was trading at US$ 1,984 per ounce, just above the record it has seen a few days back.

Note that prices hit an all-time high of US$ 1,980 this week before retreating after investors booked profits and the dollar regained some ground.

With gains seen this week, gold is heading for a seventh weekly gain, the longest stretch since 2011, while silver is poised for its biggest weekly advance in about four decades.

Investors in India are also seen flocking to sovereign gold bonds, which in the fourth tranche saw over 4 tonnes of gold equivalent being subscribed. Gold exchange traded funds (ETFs) are also witnessing increased buying interest with the net inflow in June being at Rs 4.9 billion while net assets under management (AUM) as on June end were at Rs 108.5 billion.

How gold performs in the coming days remains to be seen. Meanwhile, we will keep you updated on all the developments form this space.

Speaking of the precious yellow metal, 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 price performance % annual change in INR

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

So, is this the right time to buy gold or silver? And how can one go about investing in this precious metal?

We answer these questions in our Youtube Playlist on gold investing. Get trading ideas on gold by India’s #1 trader Vijay Bhambwani. And find out the right way to profitably trade gold now.

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

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