Sensex Falls 450 Points As Banking, FMCG Stocks Witness Selling: ONGC & HDFC Top Losers

Asian share markets opened lower today, but recovered some losses as inflation fears pressured and after data overnight showed US consumer prices surged at the fastest pace since 1990 last month.

The Nikkei is up 0.5% while the Hang Seng is down 0.4%. China's Shanghai Composite is trading higher by 0.6%.

In US stock markets, Wall Street indices ended in negative territory on Wednesday as risk appetite was curbed by surging consumer prices, which stoked worries of hot inflation.

Sensex Falls 450 Points as Banking, FMCG Stocks Witness Selling; ONGC & HDFC Top Losers

 The dollar stood at its highest levels after the hottest US inflation reading in a generation fanned bets on rate hikes.

The Dow Jones fell 0.7% while the Nasdaq plunged 1.7%.

Back home, Indian share markets opened in the red, following the trend on SGX Nifty.

Markets have extended losses as financial entities and FMCG stocks came under pressure.

Market participants will track shares of Tata Steel, Godrej Consumer Products, Piramal Enterprises, and Balkrishna Industries as these companies will announce their September quarter results today.

The BSE Sensex is trading down by 407 points. Meanwhile, the NSE Nifty is trading lower by 131 points.

Titan is among the top gainers today. Tech Mahindra and HDFC, on the other hand, are among the top losers today.

The BSE Mid Cap index is trading down by 0.2%. The BSE Small Cap index is trading on a flat note.

Sectoral indices are trading on a mixed note with stocks in the banking sector and FMCG sector witnessing most of the selling pressure.

Consumer durable stocks, on the other hand, are trading in green.

Shares of Bata India and Bajaj Holdings hit their 52-week high today.

The rupee is trading at 74.45 against the US$.

Gold prices are trading up by 0.2% at Rs 48,926 per 10 grams.

Crude oil prices are steady today after falling in the previous session on concerns that rising inflation in the US, spurred by climbing energy costs, may prompt the government to release more strategic crude stockpiles to drive down prices.

Speaking of the current stock market scenario, despite the BSE Small cap index surging over 1.8 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes small cap stocks are set for a massive up move in 2021 and beyond.

Here's why...

The Smallcap to Sensex ratio has risen from 0.32 times to 0.48 times. This compares to long term median of 0.43 times. It has moderated from 0.51 in August 2021 post the recent rise in Sensex.

More importantly, it is way lower than the previous peak ratios: 0.76 in September 2005, 0.68 in January 2008, 0.55 in September 2010, and 0.58 in January 2018.

This relative valuation indicator suggests there is still a lot of juice in the rally.

In news from the finance sector, collection efficiencies for securitised retail pools originated by non-banking finance companies (NBFC)S and housing finance companies (HFCs) improved significantly during the September quarter on the back of continued decline in fresh Covid-19 infections.

Collection efficiency including overdue collection for the most affected asset classes reached close to 100% for September 2021 from a low of 80% seen in May 2021, rating agency ICRA said in a note.

Collections in the housing loan segment continued to remain healthy while that in commercial vehicle (CV) loans also improved to more than 100% by September 2021.

This was driven by higher inter/intra-state movements upon revival of businesses.

The 90-day plus delinquencies also recorded a decline as of September 2021 compared to the peak seen in May 2021, but remain much higher than pre-Covid levels for most asset classes.

Another indication that asset quality was improving is that majority of the lenders reported lower bounce rates in their portfolio led by the improvement in collections on the back of uninterrupted operational activities.

The rating agency observed that with the resumption of normalcy in business and operational activities, the collections performance of retail pools securitized post the first wave remained robust and better than the pools originated prior to the same.

Moving on to stock specific news...

Zomato is among the top buzzing stocks today.

Online food delivery firm Zomato said its revenue from operations jumped to Rs 10.2 bn in the quarter ended September 2021 from Rs 4.3 bn a year earlier.

However, even as revenues more than doubled, its loss widened to Rs 4.3 bn from Rs 2.3 bn in the year ago period.

Zomato, which made a stellar debut on the stock exchanges in July this year, had posted revenues of Rs 8.4 bn in the first quarter ended June 30.

The company attributed the rise in losses to increased spending on branding and marketing for customer acquisition, higher investments and a growing share of small and emerging geographies in the business and delivery costs going up due to unpredictable weather and an increase in fuel prices.

Zomato also announced plans to deploy US$1 bn in startups over the next couple of years. It announced key investments in three companies - logistics aggregator Shiprocket, local shopping and savings platform Magicpin as well as fitness startup Cultfit, earlier known as Curefit.

With this, Zomato has now committed US$275 m across four companies in the past six months, including investment in Grofers.

The series of new investments come on the back of undergoing changes including a cleaning-up exercise this year as part of which it shuttered its international operations in the US, the UK, Ireland and Singapore.

The food delivery platform reported an increase in its transacting users as well as order value in the past quarter. This is a trend it is witnessing over the last one year.

Zomato share price is currently trading higher by 3%.

Disclaimer: Riki nema disclaimer.

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