Sensex Tumbles 800 Points Tracking Global Selloff; Banking & Finance Stocks Bleed

Fri, 26 Feb 09:30 am | Yash Vora, TM Team

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Asian stock markets opened sharply lower today after Wall Street's main indexes tumbled, with technology-related stocks under pressure following a steep rise in benchmark US Treasury yields.

The Nikkei is trading down by 2.4% while the Hang Seng is down 2.5%. the Shanghai Composite is trading lower by 1.8%.

In US stock markets, Wall Street indices came under pressure as a rapid rise in Treasury yields spooked equity investors.

US treasury yields rose to fresh one-year highs. The yield on the 10-year US treasury note broke above 1.45% for the first time since February 2020 on Thursday, adding to recent advances.

The Nasdaq underperformed with a drop of 3.5% for its worst session since October as tech stocks renewed their declines.

The Dow Jones Industrial Average ended lower by 1.8%, after the index reached a record closing high a day earlier as cyclical and value stocks maintained their leadership positions.

Back home, Indian share markets have opened on a negative note, following the trend on SGX Nifty and amid weak signals from Asian markets.

All eyes today will be on the GDP numbers for the third quarter of the current financial year, scheduled to be released later in the day. The Indian economy witnessed GDP de-growth of 24% and 7.5%, respectively, during Q1 and Q2.

Market participants will also track RailTel Corp of India as the company will make its stock market debut today.

The BSE Sensex is trading down by 785 points. Meanwhile, the NSE Nifty is trading lower by 223 points.

NTPC is among the top gainers today. IndusInd Bank, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened down by 1.4%. The BSE Small Cap index is trading lower by 1.1%.

All sectoral indices are trading on a negative note with stocks in the banking sector and finance sector witnessing most of the selling pressure.

Shares of RCF and Hindustan Copper hit their 52-week highs today.

The rupee is trading at 72.97 against the US$.

Gold prices are trading up by 0.1% at Rs 46,242 per 10 grams.

Watch Now: 3 Little-known Stocks We are Super Bullish On

Speaking of stock markets, in his latest video for  India's #1 trader Vijay Bhambwani talks about how to get started on the path to daily trading profits.

How do you go about this and what should you know even before you get started? Vijay answers these questions in the video below.

Tune in to find out more:

In news from the steel sector, Indian steel mills have renegotiated fresh auto contracts starting January with a price increase of at least Rs 5,500 - 6,200 per tonne on the back of an adjustment toward spot and contract prices and due to higher input costs.

Auto contracts are usually half-yearly, and were supposed to be renewed in October. However, due to the pandemic, steel mills had cut prices by around Rs 6,000 per tonne in the auto contracts.

"We have hiked prices by around Rs 6,200 per tonne in the auto contracts starting this January as the cost for the company has gone up substantially," said R.K. Goyal, managing director, Kalyani Steels. For the last contract, it had hiked prices by around Rs 4,200 per tonne, he added.

Goyal said that the contracts have been accepted by companies like Mahindra & Mahindra (M&M) and Tata Motors.

Maruti Suzuki and Hyundai have still not accepted the terms, according to the steelmakers.

Note that a quarter of Tata Steel's domestic sales are toward autos, and the numbers are similar for JSW Steel.

We will keep you updated on the latest developments from this space. Stay tuned.

Moving on, Eveready Industries is among the top buzzing stocks today.

As per an article in a leading financial daily, the Burman family, the single-largest investor in Eveready Industries with a 20% stake, may become joint promoters of the battery maker along with the Khaitan family.

Here's an excerpt from the article:

• "After a year of discussions between the Khaitans and the Burmans, the two families are considering an option to jointly control the group."

The shareholding of the Khaitan family plunged to just 4.5% from 44.1% over the past two years as lenders sold shares of Eveready pledged with them after the promoter group defaulted on payments.

The promoter group pledged their holdings in Eveready and tea producer McLeod Russel to avail of loans and repay debts of McNally Bharat Engineering.

Last year in August, Eveready's shares, held by Williamson Magor (an Eveready promoter entity), were pledged with IndusInd Bank for securing the outstanding dues of Seajuli Developers and Finance, the borrower company. The bank invoked the pledge held in the Eveready shares for the recovery of its dues from Seajuli.

As per the article, the dramatic decline in the promoter holdings in Eveready opened the dry-cell battery maker to the risk of a hostile takeover. As lenders invoked pledges, the Burman family, which runs Dabur, stepped in as a white knight to buy out the shares from the open market to avert such a possibility.

Earlier, the Burman family was planning to boost its stake in Eveready, but called off the plan after the stock price surged in the past year.

Reports state that the surge in share price is largely on hopes that there would be an open offer in which public shareholders will be able to tender their shares if there is a hostile takeover or if the Burmans become the promoters of Eveready.

Eveready Industries share price has opened the day up by 3.3%.

Speaking of smallcap stocks, since the lows in March 2020, the smallcap index has gained more than 100%.

The BSE Smallcap index is trading above the levels seen in January 2018, when smallcaps had peaked.

While caution is indeed warranted, Richa Agrawal, lead Smallcap Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rebound rally.

Have a look at the history of previous smallcap crashes and rebounds over the last two decades...

As you can see, every big fall in the smallcap index was followed by a sharp up move, a minimum gain 200%. Twice the rebounds were just shy of touching 300%.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

Also speaking of smallcaps, in one of his videos for Fast Profits Daily, Brijesh Bhatia talks about why smallcap stocks will outperform the Nifty 50 index and for how long such outperformance could last.

As per Brijesh, the  smallcap rally has only just begun.

You can watch the video here: Smallcaps Will Outperform the Nifty

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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