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Sensex Ends 267 Points Lower; Metal and Capital Goods Stocks Witness Huge Selling

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Indian share markets continued to witness selling pressure during closing hours and ended their day deep in the red.

At the closing bell, the BSE Sensex stood lower by 267 points (down 0.7%) and the NSE Nifty closed down by 98 points (down 0.9%).

The BSE Mid Cap index ended the day down 1.3%, while the BSE Small Cap index ended the day down 1.4%.

Sectoral indices ended on a negative note with stocks in the metal sector and capital goods sector witnessing most of the selling pressure.

The rupee was trading at 71.45 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.15% and the Shanghai Composite was trading flat. The Nikkei 225 was down 0.28%.

European markets were trading on a positive note. The FTSE 100 was up by 1.01%. The DAX was trading up by 1.02%, while the CAC 40 was up by 1.42%.

Speaking of stock markets in general, the market is typically focused on the most recent star performers.

You will often find the likes of HUL or HDFC Bank being the market darlings for never having a disappointing quarter.

But it is rare to find companies that thrive through most of their survival period.

Tanushree Banerjee shares a few of her thoughts on this. Here’s an excerpt of what she wrote in a recent edition of The 5 Minute WrapUp…

It is rare to find companies that survive for decades. It’s even rarer to find ones that thrive through most of their survival period.

So, if you do not wish to pay steep valuations for the market darlings, you need to look for the companies with history and consistency on their side.

And they shouldn’t be too conspicuous to the market either.

I am talking of companies like Hawkins and City Union Bank. They have a track record of paying dividends for decades.

The dividends such companies pay are especially helpful at a time when interest rates are headed lower globally.

And, as seen in the chart below, ‘risk-free returns’ from debt seem to have gone missing.

Inflation Adjusted Risk Free Returns Are Negligible Globally

In the news from the realty sector, Oberoi Realty and Capacite Infraprojects were in focus today.

Shares of the companies witnessed selling pressure after the income Tax (IT) Department carried out searches for suspicious transactions, including alleged purchase from dubious entities.

Capacite Infraprojects is Oberoi Realty group’s biggest vendor.

As per the news, clarification has been sought by stock exchanges on the development and the companies are yet to respond.

As per the report, there was suspicion on related party transaction within Oberoi and the IT department also suspects a difference between the sale price of housing units shown on the books and the registered prices.

The report added that since Oberoi Realty deals in the luxury home segment, the department suspects benami transactions by flat buyers to hide their identities.

Earlier this month, the IT department had conducted searches at Mumbai and Pune-based offices of four other realty firms, including Hub Town, Atul Projects, Wadhwa Group and Radius Developers.

A statement issued by the Press Information Bureau, on behalf of the IT department, said that the searches across more than 40 premises led to recovery of evidence related to receipt of ‘On Money’ sale of commercial and residential blocks, bogus unsecured loans taken, bogus long-term capital gains and various other sham transactions to evade income aggregating about Rs 7 billion.

How this all pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

In the news from the commodity space, crude oil prices witnessed buying interest today.

Prices rose above US$ 60 a barrel for the first time in over a week amid data that showed a larger-than-expected drawdown in US crude inventories.

The American Petroleum Institute (API) reported a crude oil inventory draw of 3.45 million barrels for the week ending August 15, compared to analyst expectations of a 1.889-million-barrel draw.

The inventory builds this week compares to last week’s surprise build of 3.7 million barrels, according to API data.

Oil prices rose on the back of the above announcement but ongoing worries about a global economic recession capped gains.

Note that crude oil has been witnessing volatility lately amid weekly declines in US inventories and rising geopolitical tensions between Iran and other countries.

Meanwhile, volatility was also seen on the back of ongoing geopolitical tensions in the Middle East.

How this all pans out remains to be seen.

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

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