When stocks at 60 P/E multiples keep on rising and those at 6 get stranded in a bullish market, investors who go by the book are bound to get confounded. So why is it happening? The lockdown has hit profitability of companies, thus P/Es can lead to wrong judgement in stock selection, says a market veteran. When people have made a lot of money and the momentum is bullish, there is higher risk appetite to go for stocks that have not moved up or can be turnaround stories, says another. People are simply sticking to bigger companies, and businesses that are performing well and which have no debt-related issues, proffers yet another. Take the logic that suits you!
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded some 24 points higher at 7 am (IST) in signs that Dalal Street might see a positive start. |
| On Thursday, Nifty bulls lost steam after a six-day rally and formed a Doji candle on the daily chart, suggesting indecisiveness among traders. This was the first time in seven sessions that the index made a lower high-low formation, reflecting a pause in momentum. |
| Stocks in other Asian markets traded mixed amid concern that the recent rally may have gone too far. Japanese shares dipped, while indices in China, Hong Kong, South Korea and Australia were largely flat. |
| Contracts on the S&P 500 were little changed this morning after the index snapped a four-day winning streak in overnight trade. S&P500 lost nearly half a per cent and Nasdaq 0.69% but the Dow held a slender gain of 0.05%. |
| The rupee depreciated 10 paise to close at 75.57 against the US dollar on Thursday as US dollar strengthen and domestic equities weakened. |
| The euro jumped to a 12-week high against the US dollar on Thursday after the European Central Bank increased stimulus. The dollar index fell 0.67% but the British sterling gained 0.31%. |
| Oil prices eased slightly on Friday as markets wait to see whether major producers will commit to an extension of record production cuts to support oil prices. Brent futures were down 8 cents, or 0.2%, at $39.91 a barrel while WTI crude futures fell 15 cents, or 0.4%, to $37.26. |
| Gold gained more than 1% on Thursday to $1,704 per ounce as weakened equity markets lent some support to demand for the metal. But in home market, prices fell by Rs 274 to Rs 47,185 per 10 gm in Delhi. |
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LIC bets big on consumer firms... India's biggest institutional investor LIC is betting on consumer-facing companies, BSE data for March quarter showed. The insurer invested close to Rs 13,000 crore based on average quarterly prices in prominent companies including HUL, Tata Consumer Products, Mahanagar Gas, Havells India, Amara Raja Batteries and TVS Motor by 0.7-2.6% during the quarter. The latest stake purchase also makes LIC the largest domestic institutional investor in HUL.
Read More RIL gets a sixth cheque… Reliance Industries said on Friday that Abu Dhabi state fund Mubadala Investment Co will buy a 1.85% stake in its digital unit, Jio Platforms, for Rs 9,093 crore. The group has now sold a combined 19% interest in Jio Platforms, which houses movie, music apps and telecoms venture Jio Infocomm, in six fundraising deals, including a 9.99% stake sale to Facebook Inc for $5.7 billion.
Read More HDFC plans partial stake sale... HDFC is exploring a partial stake sale to raise at least $1 billion, with the country's biggest mortgage lender looking to beef up its war chest ahead of a possible spurt in demand for loans once the economy reopens fully. The Mumbai-based mortgage player — which also owns 19.41% in HDFC Bank, the most valuable private sector lender — is in discussions with bankers, said people close to the developments.
Read More India keeps Google tax despite US probe... India is undeterred by the US investigation into its tax on digital transactions, or equalisation levy, covering companies such as Netflix and Amazon, government officials said. The government expects many other countries to adopt the same position. The US on Tuesday initiated a probe into 10 nations and blocs, including India, that have imposed such taxes or are in the process of doing so. They include the UK, Brazil and the EU.
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Bank earnings estimates cut… Goldman Sachs has cut its earnings estimates for Indian banks by around 40% on average on account of increased provisions on deferred loans and sharp fall in operating profit. It has downgraded Axis Bank to 'sell' from 'neutral' and cut target price to Rs 323 from Rs 417 as it believes continued challenges on asset quality and weak operating profitability will weigh on earnings. It has downgraded mortgage lender HDFC to 'neutral' from 'buy' and lowered target price by 16% to Rs 1,625 due to subdued outlook for the underlying mortgage business. It has removed ICICI Bank from its coverage list, but maintained 'buy' rating.
Read More Auto industry set to shrink 40% … India' auto industry may post an aggregate drop of 20%, or Rs 75,000 crore ($10 billion), in revenue and a 40%, or Rs 15,000 crore, decline in operating profit with factories set to operate at record low utilisation levels this financial year. Automakers could witness a margin compression of 2-5 per cent, as India emerges from the lockdown. FY20 revenue and operating profit are pegged at about Rs 3.5-3.7 lakh crore and Rs 38,000-42,000 crore, based on volumes and average selling price of vehicles.
Read More Traders claim loss due to NSE glitch… Several traders with positions on the Bank Nifty claimed they lost money on Thursday as NSE was hit by a software glitch that prevented the updation of Bank Nifty options contract prices on linked terminals, causing the execution of trades at random prices. The problem apparently continued throughout the day, forcing all brokers to put Bank Nifty contracts on the square-off mode, leaving traders frustrated.
Read More FinMin enforces austerity … The Finance Ministry has barred all ministries and departments from proposing new schemes in FY21, barring those announced under the Pradhan Mantri Garib Kalyan Yojana and the Atmanirbhar Bharat Abhiyan, to cope with spending needs due to the Covid-19 crisis amid an economic slump. Schemes already approved for this fiscal year have also been put on hold until the end of March 2021.
Read More Meanwhile... Kotak offers growth assessment formula…. India may be staring at a negative growth for FY21 with the first two months of the fiscal witnessing no activity because of Covid-19, CII president Uday Kotak said. The growth for this year, however, should be looked at 'granularly', in terms of the month-on-month improvements and not an average for the entire year, he said. He said growth should be measured in terms of indicators such as electricity consumption, traffic on highways, and their improvement every month.
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