Share markets in India are presently trading on a positive note. Sectoral indices are trading in green with stocks in the auto sector and metal sector witnessing maximum buying interest.
The BSE Sensex is trading up by 570 points (up 1.7%), while the NSE Nifty is trading up by 181 points (up 1.6%). The BSE Mid Cap index is trading up 1.8%, while the BSE Small Cap index is trading up by 1.6%.
The Rupee is trading at 72.79 to the US$.
In the latest development from the IPO space, wire and cable maker Polycab India filed draft papers with markets regulator to float an initial public offering.
The company's IPO comprises fresh issuance of shares worth Rs 5 billion, besides an offer for sale of 24.9 million shares by promoters and existing shareholder International Finance Corp (IFC). IFC will sell 10.6 million shares through the offer for sale (OFS) route.
With so many IPOs set to hit the markets, we at Equitymaster believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.
Moving on to the news from commodity space, crude oil is witnessing selling pressure today as surging output by the world's three largest producers outweighed supply concerns from the start of US sanctions next week against Iran's petroleum exports.
Downward pressure on oil is also seen in the physical market, where Saudi Arabia is expected to cut December crude prices amid higher supply and a glut in refined products that has eroded refinery profits.
Speaking of crude oil, almost every time a rise or fall in the stock markets is invariably linked to crude oil prices.
Logically, it seems right too. Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.
It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening. After all, there is an election year coming up.
But has it really affected the stock markets?
Are Stock Market Returns Really Linked to Crude Oil Prices?
Here's what Girish Shetty wrote about it on one of the recent editions of The 5 Minute WrapUp...
- In the short-term: Yes.
But in the long run, as we can see, Sensex returns have been independent of crude oil prices or even positively co-related!
Crude oil prices doubled from US$ 41 in December 2008 to US$84 in April 2010. In the same time, Sensex also doubled from 8,800 levels to 17,600 levels.
So, please don't fret unnecessarily about crude oil.
Check if your business has a moat that helps it pass on input price increases to its customers. In the long run, they will survive and also gain market share from those that can't pass on prices. Short term pessimism due to rising crude oil prices provides a buying opportunity in these stocks.
As per him, focusing on quality stocks rather than crude oil will matter more in the long run.
In the news from the aviation sector, shares of aviation companies are trading on a positive note today amid a sustained slump in global crude oil prices.
Jet Airways share price and SpiceJet share price are trading up by 3.5% while Interglobe aviation share price is trading up by 3%.
Moving on to news from the results corner, Axis Bank, Hindalco, Indian Oil, Power Finance Corporation, NTPC, Reliance Power, JSW Energy, Allahabad Bank, GCPL and Bata India are among dozens of companies, which will announce their quarterly results later today.
You can read our recently released Q2FY19 result analysis of the following companies: Asian Paints, TVS Motors, Wipro, Ambuja Cement, HDFC Bank, Infosys and more.
By the way, in our latest edition of the stock market podcast, Richa Agarwal, the editor of small-cap service Hidden Treasure, talked about buying small cap stocks in this massive correction.
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