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Sensex Ends 336 Points Lower; Metal and Energy Stocks Witness Selling

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Indian share markets witnessed huge selling pressure today and ended their day deep in the red.

At the closing bell, the BSE Sensex stood lower by 336 points (down 0.8%) and the NSE Nifty stood down by 95 points (down 0.8%).

On the other hand, the BSE MidCap index ended the day up 0.2%, while the BSE SmallCap index ended the day up by 0.5%.

Sectoral indices ended on a mixed note. Stocks in the energy sector and metal sector witnessed huge selling pressure, while telecom stocks were trading in the green.

The rupee was trading at 71.78 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 2.03% and the Shanghai Composite was down by 0.61%. The Nikkei 225 was down 0.49%.

European markets were trading on a mixed note. The FTSE 100 was down by 0.13%. The DAX was trading down by 0.15%, while the CAC 40 was up by 0.05%.

Losses for Indian markets were seen ahead of the Q2 gross domestic product (GDP) data to be released today. Also, fears that a new US law supporting Hong Kong protests could derail efforts to solve the US-China trade war weighed on markets.

Speaking of the Sensex’s fall today, the past few months have seen stock markets trading on a volatile note. While the Sensex has been rising, the rest of the market has seen most stocks falling. And even the Sensex’s rise has been topsy-turvy.

But isn’t that how markets have always behaved?

If you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street – only up or down.

Stock markets have always moved in cycles.

Here’s what Radhika Pandit wrote about this in one of the editions of The 5 Minute WrapUp…

If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.

Sarvajeet and I believe we are seeing a similar situation currently.

The economic slowdown does not herald the end of the world or for that matter the end of India. It’s a phase and like all phases – This too shall pass.

So, the real question is – Are you taking advantage of these market movements to buy quality stocks?

Also, amid such volatile times, Tanushree Banerjee talks about the trends and stocks that have huge profit potential.

One of the trends she talks about is the privatisation of PSUs. She talks about the huge potential of this sector and the stocks that could be the big winners!

Tune in to find out more…

Video: https://www.equitymaster.com/detail.asp?date=11/26/2019&story=10&title=Two-Trends-to-Look-at-as-Sensex-Crosses-41000-Levels&utm_source=homepage&utm_medium=website&utm_campaign=Content&utm_content=featured-video

In news related to financial markets, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 10 billion yesterday.

Domestic institutional investors (DIIs), on the other hand, were net sellers to the tune of Rs 1.5 billion.

The same was also seen on Wednesday, FPIs remained net buyers of Indian equities with a purchase of Rs 469.3 million of shares on a net basis on Wednesday.

In the news from the IPO space, Home First Finance Company (HFFC) filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) today for its proposed initial public offering (IPO).

The housing finance company is expected to raise Rs 15 billion through the public issue.

The IPO comprises a fresh issue of Rs 4 billion and Rs 11 billion offer for sale by promoters and investors.

The prospectus of the company also states that it may consider a pre-IPO placement of up to Rs 1.6 billion in consultation with merchant bankers. If the pre-IPO placement is undertaken, the amount will be reduced from the fresh issue.

The company intends to utilize the net proceeds from the fresh issue for augmenting its capital base to meet requirements arising out of the growth of business and assets.

Speaking of IPOs, the year 2019 hasn’t seen much activity in the IPO market. Since the start of the year, there have been just 13 IPOs on the BSE main board.

Even the ones that hit the primary markets were mostly small to mid-sized IPOs. And no mega IPOs.

The total amount raised through IPOs has shrunk to Rs 107.2 billion in 2019, a third of the Rs 309.6 billion raised in the previous year.

Very few companies come out with IPOs during bearish market conditions. So, when the IPO market is sluggish, you must take that as an indicator of market sentiment and liquidity conditions.

However, it is interesting to note that despite the tepid market conditions, most of the companies gave positive listing day gains.

In fact, if you had invested in each one of them and held them till now, your gains would have been even better. In fact, 10 of the 13 companies have delivered positive returns.

So, unlike bull markets wherein selling shareholders do their best to squeeze the highest price, volatile and bear markets often offer fantastic opportunities to spot great companies and get onboard early on.

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

Originally Posted on November 29, 2019

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