Share markets in India are presently trading on a negative note. Benchmark indices edged lower today, dragged down by a spike in oil prices.
Global oil prices soared more than 4% today following news that the US had killed a top Iranian general.
Barring IT sector and healthcare sector, all sectoral indices are trading on a negative note with stocks in the banking sector and metal sector witnessing most of the selling pressure.
The BSE Sensex is trading down by 198 points while the NSE Nifty is trading down by 64 points. The BSE MidCap index is trading down by 0.2%, while the BSE SmallCap index is trading up by 0.3%.
The rupee is trading at 71.15 against the US$.
In news from the commodity space, Gold prices in India inched higher today as global rates spiked after a senior Iranian military official was killed in a US air strike.
February gold futures surged over 1% to Rs 39,680 per 10 gram. Over the past two weeks, gold prices have surged about Rs 1,700 per 10 gram, tracking a jump in global prices and a depreciation of the rupee against US dollar.
The Indian rupee today fell to one-month low of 71.68 against the US dollar as oil prices rose sharply amid geopolitical tensions in the Middle East.
India imports most of its gold requirements. Gold prices in India include 12.5% import duty and 3% GST.
Silver prices also rallied, continuing their recent gains. Silver futures gained 0.8% to Rs 47,384 per kg.
In global markets, gold prices climbed to a four-month high of US$ 1,540.48 per ounce amid tensions in the Middle East.
Iranian Major General Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi al-Muhandis were killed in the air strike on their convoy at Baghdad airport.
Gold is considered a safe store of value during times of economic or political uncertainty.
What effect the middle east conflicts have on gold in the coming days remains to be seen. We will keep you updated on all the developments from this space.
Speaking of gold, how lucrative gold has been as a long-term investment in India?
The chart below shows the annual returns on gold over the last 15 years...
Gold Has Been a Shining Long-Term Investment
As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.
Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...
- In fact, gold has delivered double-digit gains in 10 of the last 15 years.
During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment.
Moving on to news from the finance sector, shares of IIFL Securities are locked in 5% upper circuit limit today after ace investor Rakesh Jhunjhunwala acquired a stake in the company.
According to the BSE bulk deal data, Jhunjhunwala bought 2.7 million shares of IIFL Securities on Thursday at an average price of Rs 42.83 per share.
The retail and institutional broking house was listed on the bourses in September last year, after getting demerged from its parent IIFL Holdings.
Last year, financial services firm IIFL Holdings announced the demerger of its finance, wealth and capital business into three separate entities and listed them on bourses.
In other news, Satin Creditcare Network (SCNL) has received external commercial borrowing (ECB) funding of US$ 15 million from Development Bank of Austria, to accelerate its lending portfolio.
Reports state that this investment will support Satin Creditcare Network in its planned expansion, portfolio growth and its efforts in increasing financial inclusion through its operations in 22 states.
Note that this will be the third round of external commercial borrowing funding by a foreign institution in the company. The first ECB investment in SCNL was by World Business Capital and second investment was by responsAbility Investment.
Satin Creditcare share price is presently trading down by 0.4%.
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