Teji Mandi: Three things investors should know on November 11, 2020
Teji Mandi

Bank Nifty hits 8-month high: Will the momentum sustain?

The secular rally in banking stocks over the last couple of weeks has helped every banking stock- from higher quality to lower ones- to rise. The stocks have rallied by 15% to 40% in the last two weeks to catch up with their long-term multiples.

As a result, Bank Nifty has touched 8-month high levels on November 11. Large-cap banking stocks continue to do well as Kotak Mahindra and HDFC Bank hit the 52-week high. On the other hand, small and mid-cap stocks are witnessing a bout of profit booking.

We are anticipating a minor correction in banking stocks in the short term. Yet, in the long run, the trend will depend on asset quality and earnings growth. Any under-estimation of stress or below par lending growth will push correction in these stocks.

MSCI rejigs its India portfolio: 12 stocks to be added in global index:

Morgan Stanley Capital International (MSCI) has confirmed to add 12 Indian stocks to its Global Standard Indexes and remove two as part of the semi-annual review. The changes will take place on November 30, 2020.

ACC, Adani Green, Apollo Hospitals, Balkrishna Industries, IPCA Laboratories, Kotak Mahindra Bank, L&T Infotech, MRF, Muthoot Finance, PI Industries, Trent and Yes Bank are the 12 stocks that will become part of the MSCI Global Standard Index. Two stocks that will be deleted are Bosch and LIC Housing Finance.

The change in India’s weightage could bring in passive inflows of over $2.5 billion into these stocks. Kotak Mahindra Bank is expected to benefit the most with an inflow worth $797 million. Adani Green could see inflows worth $335 million. Yes Bank could see inflows worth $ 184 million.

Sovereign gold bond scheme: Should you invest?

The eighth tranche of Sovereign Gold Bond (SGB) 2020-21, which is issued by the Reserve Bank India (RBI) is open for subscription till November 13. The issue price for Sovereign Gold Bond Scheme 2020-21-Series VIII has been fixed at Rs 5,177 per gram of gold, the central bank has said.

In the past few years, SGB has become a preferred instrument for the government to offer gold. It was introduced to bring down the demand of physical gold in India and thereby curb the import and illegal smuggling of the precious metal.

Gold remains a crucial part of any investor's portfolio and SGB is an attractive tool to invest in the yellow metal. It offers a dual benefit of gaining 2.5% per annum fixed interest on their investment and the rise in the value of gold once the bond is redeemed.

Gold prices have cracked from the top in recent months as equities are making a big comeback across the globe. Gold and Equities usually share an inverse relation. Now, the trend being in favor of equities, gold prices are likely to fall further. Hence, we would like to suggest investors to wait a few more months for better price discovery in gold.

(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal