The air strike on terror camps in Pakistan is a positive for the markets as it illustrates a “decisiveness” in foreign policy and increases the chances of Narendra Modi to retain power after the forthcoming polls, say analysts.
The comments come in the wake of concerns shown by investors in the immediate aftermath of the strikes in Pakistani territory which markets opening with a huge gap down.
“We see this panic gap down and any further slide as a buying opportunity which has been the case in past such events as well. And this gives higher odds to the Modi government staying on post-elections,” Sameer Kalra, an equity research analyst and founder at Target Investing, said in a note Tuesday.
Economists at SBI said the markets is likely to gain after the strikes as they will look at the action as the one which builds a positive deterrence illustrating a decisiveness in our foreign and national security policy
In a note, SBI economists gave an account of how the markets reacted to the earlier armed conflicts like after the cross-border action by India following the Uri attack in 2016 and also the Kargil conflict, where Pakistani intruders were pushed back.
It said during the Kargil conflict between May and July 1999, leading stock indices showed an initial decline but strong recovery thereafter, while after Uri action, the Sensex gained 100 points and so was the rupee.
The SBI report also deemed to suggest that just like the previous actions, conflicts are “more localised in nature”.
It can be noted that the markets opened in the red Tuesday, after the strikes that were reported to have been carried out in the wee hours. There was some recovery in the indices later and the BSE benchmark was trading 0.60 percent down at 1510 hrs.
In a swift and precise air strike following the Pulwama attack, India bombed and destroyed Jaish-e-Mohammed’s biggest training camp in Pakistan early Tuesday, killing a “very large number” of terrorists, trainers and senior commanders.
Misleading information, lack of understanding keep investors away from stocks
News, these days, is rife with discussions about the state of the Indian economy and its growth prospect. Every other day, a domestic or an international research report is released, predicting the possible economic growth rate of India. Analysis of such reports invariably leads to one clear takeaway – it is the right time for retail investors to be a part of this growth story. If you find yourself wondering what does this mean and how can you accomplish it, here are some tips.
Equity is best investment option
The historical market data shows that when compared with other asset classes, equities have reported higher returns over a long term. From 1979 to 2018, when average inflation stood at 8.1%, FDs offered an average return of 9%, gold offered a return of around 10%, real estate investments offered approximately 13%, while equities offered 16% returns in the same duration, thereby, beating inflation significantly.
The quality of equity to give inflation-adjusted returns has made it an integral part of every financial plan. Be it planning for retirement, an international trip, children’s education or other long-term goals, a healthy dose of equity in the investment portfolio is regarded as a must. The value appreciation in investments provide by equity is unmatched and builds a strong case to include this asset-class in your financial plans.
In spite of going through a number of recessionary phases time and again, global equities have given more than double the returns on an average per year. The domestic index, Sensex, has multiplied by more than 360 times since its inception in 1979, giving a CAGR of approximately 16%, even after periodic market corrections.
How to invest in equities
Though equity investment makes sense in the light of its merits, many investors still shy away from taking the plunge. Misleading information and lack of understanding tend to keep investors away from stock markets. However, investment in equity is not as complicated as it is made out to be. Below are a few simple steps you can take to harness the potential of this market:
Research – Making investments in the equity markets is not rocket science. Once you have gained clarity on markets, it is easy to make your money work for you. Do basic research on how markets work and various concepts of equity investing. Rely on credible online resources and financial gurus to gain requisite insights. Do not make any decision on hearsay. Do proper homework- ask questions and seek answers to make an informed decision.
Observe and learn – Observe what is in demand and moving fast. For instance, a weekend trip to a local mall can show you the wide range and variety of snacks on the shelf under the brand of few giants in the retail sector. While driving to the mall, you notice the traffic which indicates growing two-wheeler and car sales. Once you have identified the products that are in demand and likely to be sought after, in the future, all you need to do is identify the companies that make them and invest in those companies.
Identify good stocks – Based on your research, identify companies that have business opportunities available in the sectors you identified. Ensure that they are managed by capable and visionary management. Check the track record of business to withstand challenges. This will serve as an indicator of their business and management capabilities which are crucial factors for success.
Take a long-term horizon – Economic and business cycles are generally believed to last for five-seven years. It would be futile to get perturbed and create panic due to short-term market movements. In fact, regard these corrections as an opportunity to accumulate quality stocks. If you have invested after conducting thorough research, be rest assured that you will accumulate inflation-beating returns over the long-term.
Seek expert help, if need be – If you feel overwhelmed with the process seek out professional help from a stockbroker. With their market understanding, they can guide you in achieving an efficient allocation of your limited resources to reap maximum benefits. Just like you go to a specialist and pay a consultation fee for curing specific ailments, visiting a brokerage house can cure your portfolio of stagnation and less than optimal returns to improve your financial health.
D-St gets into pre-poll mood as FPIs bet big on stocks
Bulls appear to be showing no signs of fatigue, as the market is gearing up for a pre-election rally buoyed by hopes that the ruling NDA government could get a majority for the second term. Market sentiment was also strengthened on the back of strong global cues.
Since the beginning of March, benchmark 30-share Sensex has gained 1668.22 points, or 4.65%, just in 7 sessions as foreign investors showed renewed interest while rupee recovered its lost ground. The broader Nifty gained 508.70 points or 4.71%. On Tuesday alone, the Sensex gained 481 points while Nifty advanced 133 points.
The broader market has continued with its northbound journey as both the BSE Mid-cap and Small-cap gauges rose by 0.65% and 1.07% respectively.
“We will continue to see this rally in the indices till April, but close to the elections results the volatility may return,” said G Chokkalingam, founder and managing director, Equinomics Research and Advisory. “The mid-cap and small-cap space have already seen a loss of almost Rs 25 lakh crore. They will now rebound and can outperform the large-cap ones too. We will also see a good 15-20% rally in quality stocks in the coming days,” he said.
Analysts think the only concern could be the potential spurt in crude oil prices. Global crude benchmark Brent crude futures rose 0.98% to $67.23 per barrel on Tuesday.
Sector-wise, except BSE Information Technology (-0.22%), all the other 18 sector sub-indices ended in the green zone with BSE Realty taking the pole position rising 2.60%. The rising rupee, however, dragged the IT sector. The rupee on Tuesday strengthened by 25 paise to 69.64/$ during the early trade, driven by foreign fund inflows and a weaker dollar against key rival currencies globally. The domestic currency closed at 69.71/$, gaining 0.18 paise.
Analysts had previously said that foreign investors would not miss the pre-election rally and it seems to be true now. Foreign investors have started buying in the domestic market after a long time. Overseas investors have pumped in a net Rs 2,741 crore into the Indian capital markets in the first five trading sessions of March, mainly due to positive market sentiment. In February, foreign portfolio investors (FPIs) had invested a net amount of Rs 11,182 crore in the capital markets (both equity and debt).
As per the provisional data, the FPIs bought shares worth Rs 2,477.72 crore on Tuesday while domestic institutional investors (DII) sold shares worth Rs 990.48 crore on a net basis.
According to a report by Motilal Oswal Financial Services, Nifty surpassed its resistance trend line of the sideways channel and closed above the same with the formation of the bullish candle on a daily scale which indicates bullish bias. Now it has to continue to hold above 11200 to extend its gains towards 11400-11450. Overall setup and momentum are positive and a follow-up could continue its extended momentum while immediate support exists at 11200 and then at 11118.
On Tuesday, the 30-share Sensex closed at 37535.66 jumping 481.56 points or 1.30%. Since the beginning of the year, the gauge has gained 1281.09 points, or 3.53%, so far. The broader Nifty also had a positive day settling at 11301.20 surging 133.15 points, or 1.19%. During the intra-day trade, the 50-share index traded between 11229.95 and 11320.15.
Indian stock market becomes 7th largest globally: All you need to know
Indian stock market has achieved the latest milestone. India’s domestoc and equity market has surpassed Germany to become world’s seventh largest stock market.
It should be noted that Germany is Europe’s biggest share market.
According to Bloomberg data, Indian stock market, for the first time in seven years, has surpassed European’s largest economy.
The achievement came after India’s positive returns as firms depend upon domestic demand.
Meanwhile, Indian companies have raised nearly Rs 6 lakh crore from equity and debt instruments in 2018, but volatile market conditions brought down the kitty by 30 per cent and political uncertainties ahead of the 2019 general elections may again cast a shadow on fund-raising activities in first half of the new year.
Experts, however, are hopeful the fund-raising will gather steam in second half of 2019 with a pick-up in the overall investment climate.
The data shows the debt market remains the most preferred route for raising funds to support business needs of the corporate world.
Out of the cumulative Rs 5.9 lakh crore garnered so far this year from capital markets, a large chunk or Rs 5.1 lakh crore has been mopped up from the debt market and the remaining amount of about Rs 78,500 came from equity markets, figures compiled by data analytics major Prime Database showed.
In 2017, firms had raised Rs 8.6 lakh crore, including nearly Rs 7 lakh crore through debt markets and Rs 1.6 lakh crore from equities.
In equity market, funds mostly came from initial public offers (IPOs) and issuance of shares to institutional investors.
The final figures may go up to end the year at around Rs 6 lakh crore for debt and equities, experts said.
The funds have been raised mainly for business expansion plans, loan repayments and to support working capital, while a large amount raised from IPOs also went to the promoters, private equity firms and other existing shareholders for part or full sale of their investments.
Sensex surges 718 points amidst strong performance from banking stocks
Market benchmark Sensex Monday rallied over 718 points to end above the 34,000-level buoyed by heavy buying mainly in financials like ICICI Bank and SBI coupled with revived optimism relating to RBI’s move to ease liquidity crunch. The broader 50-share Nifty too rose over 220 points to close above 10,250.
Among the Sensex constituents, ICICI Bank was the biggest gainer with 11% jump, followed by State Bank of India, which rose 8.04%. The index heavyweight ICICI Bank contributed over 200 points to the Sensex gains. The country’s top private sector lender ICICI Bank swung into profit in the second quarter of this ongoing fiscal. The bank had reported a net loss of Rs 119.55 crore in the first quarter of the current fiscal. On year-on-year basis, ICICI Bank, however, reported a 42% drop in its consolidated net profit to Rs 1,204.62 crore in the September 2018 quarter.
Other top Sensex gainers were Adani Ports, L&T, Axis Bank, Reliance Industries, Tata Steel and TCS, rising up to 7.33%. Market sentiments were further revived by the Reserve Bank’s decision to pump in Rs 40,000 crore into the system in November through purchase of government securities, with an aim to tackle liquidity crunch. “Markets bounced out of extremely poor sentiment and oversold conditions. A good sign short term as we may have started a short-covering rally in equities,” said Rohit Srivastava, Fund Manager – PMS, Sharekhan by BNP Paribas.
“The rise was broad-based which is a good sign and weak sectors like PSU banks were strong performers. Given the double bottom in the bank nifty, it appears the trend may continue in the near term,” he added.Snapping its two-day losing streak, the 30-share index ended 718.09 points, or 2.15%, higher at 34,067.40. It had opened 173.33 points, or 0.52%, higher at 33,522.64. The NSE Nifty too surged 220.85 points, or 2.20%, to reclaim the 10,250 mark. It had opened 44.25 points, or 0.44%, higher at 10,074.25.
Bucking the uptrend in a majority of Sensex constituents, IndusInd Bank, HDFC Bank, Kotak Bank and Bharti Airtel fell up to 2.26%. Meanwhile, the rupee was trading flat at 73.43 against the US currency. According to Friday’s provisional data, foreign funds sold shares worth a net of Rs 1,356.66, while domestic institutional investors bought shares to the tune of Rs 1,875.89 crore. Dr Reddy’s too surged 5.29% to Rs 2,531.65 on the NSE after the company reported a 77% jump in profit-after-tax for the quarter ended September 30 at Rs 504 crore against Rs 387.6 crore in the second quarter of FY18.Oil prices fell on Monday. Brent crude oil futures were down 31 cents at USD 77.31 a barrel, while WTI Futures fell by 28 cents to USD 67.31.
Meanwhile, concern over China’s slowing economy kept Asian stocks subdued. Shanghai Composite ended 2.2% lower, while Hang Seng Index rose 0.4%. Japan’s Nikkei closed 0.2% down.European shares climbed on strong earnings DAX was up 0.7% while STOXX50E rose 0.5%.
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