Sensex Ends Day in Green; Tata Motors Up 3.3%

After opening the day in green, share markets in India witnessed a positive day of trading and ended the day in green. Sectoral indices were mixed, with stocks in the realty sector and stocks in the metals sector leading the gains.

At the closing bell, the BSE Sensex stood higher by 283 points (up 0.8%) and the NSE Nifty closed up by 84 points (up 0.8%). The BSE Mid Cap index ended the day up 1.4%, while the BSE Small Cap index ended the day up by 2%.

Asian stock markets finished mixed. As of the most recent closing prices, the Hang Seng was up by 0.8% and the Shanghai Composite was down 0.2%. The Nikkei 225 was up by 0.9%. Meanwhile, European markets were trading in green. The FTSE 100 was up by 0.1%, The DAX, was up by 0.1% while the CAC 40 was up by 0.2%.

The rupee was trading at Rs 67.08 against the US$ in the afternoon session. Oil prices were trading at US$ 75.9 at the time of writing.

In news from stocks in the IT sector. Infosys share price was in focus today after the IT services major said that it was deferring hiring of US employees.

The company, under its previous CEO Vishal Sikka, had originally set to add 10,000 local employees in the US in two years, starting May 2017. Now, Infosys suggests it will take more time to increase this number.

The company hired around 4,000 of these employees already but plans to slow down the rate of hiring.

Interestingly, the US hiring decision was not the first time that Infosys re-evaluated its near- and long-term goals following Sikka's departure.

The company had also cut down on its US$20 billion revenue target by 2020, as it had put additional pressure on the company's top executives to meet aggressive near-term goals.

Infosys share price ended the day up by 1.2% at a 2-year high.

How It Paid Off to Bet on the Uncertainties in the IT Sector

During the financial year 2017-18, the BSE Sensex delivered a return of about 11%. Blame the market correction that started in February for the modest returns.

However, the BSE IT index gained over 19% during the same period. Now, that's a significant outperformance. If you were holding some solid IT stocks last year, you have most likely fared better than the Sensex.

But last year, the markets were not as optimistic on the sector as they are now.

Look at the chart...

During the first half of 2017-18, the IT sector was among the underperformers, and it was lagging way behind the Sensex.

During the first half of 2017-18, the IT sector was among the underperformers, and it was lagging way behind the Sensex. In fact, until October 2017, the index was still hovering near levels seen in April 2017.

But once the mood of the market changed, the IT index not only recovered but went on to outperform the Sensex.

In Ankit Shah's (Research Analyst) premium newsletter Insider, the IT sector was his top pick since launch of the service in July 2017.

Here's Ankit discussing what gave him the foresight to recommend so many promising IT stocks.

• Last year when I had discussions with my fundamentals-based research team, I got a clear sense that the uncertainty and negativity surrounding the IT sector -- the H1-B visa problem, the global slowdown concerns, strengthening of the Indian rupee, high attrition rates, etc. -- was blown out of proportion. There was a good contrarian opportunity to buy 'uncertainty' when the markets were fearful of IT stocks.
  
  Like I said earlier, it is during moments of 'uncertainty' that lucrative investment opportunities are created.

Moving on to news from stocks in the auto sector. Tata Motors share price was among the top gainers on the bourses today after the company's wholly-owned subsidiary, Jaguar Land Rover reported robust sales for the month.

Jaguar Land Rover (JLR) reported its April sales numbers.

JLR's sales grew by 6.1% in May, compared to the same period last year. The sales stood at 48,281 units in May this year.

The sales growth was primarily driven by the introduction of new models including the Range Rover Velar, the Jaguar E-PACE, and the new Land Rover Discovery. Retail sales for May notched up significant gains year-on-year in the UK (20.9%), overseas markets (24%) and North America (16.7%), nosed down in Europe (-8.7%) China (-8%), as import duty reduction is resulting in deferred purchases in advance of the 1 July effective date.

Tata Motors share price ended the day up 3.3%

Speaking of auto sales, one of the major indicators to determine growth in the India economy is the volume of vehicles sold.

For the first nine months of FY18 at least, the auto industry has done well to grow in double digits after some lean years.

Vehicle sales grew by 11.3% YoY during this period. The best performing of the lot were commercial vehicles (CVs), volumes of which grew by 15% YoY. Two-wheelers also did well growing by around 12% YoY.

In fact, in a recent conference call, the management of the largest two-wheeler company in the country - Hero Motocorp - said they expect the two-wheeler industry to grow in double digits in FY19 as well.

We're keeping a close eye on auto stocks.