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Sensex Ends 192 Points Higher; Energy and IT Stocks Witness Buying
Mon, 21 Jan Closing | Monish Vora, TM Team

Indian share markets traded on a positive note throughout the day and ended higher. Gains were seen in the energy sector, IT sector and oil & gas sector, while auto stocks and realty stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 192 points (up 0.5%) and the NSE Nifty closed higher by 55 points (up 0.5%). The BSE Mid Cap index ended the day down 0.6% and the BSE Small Cap index ended the day down by 0.7%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 0.4% and the Shanghai Composite was up by 0.6%. The Nikkei 225 was up 0.3%.

The rupee was trading at 71.21 against the US$.

In the news from the banking space, IDBI Bank share price was in focus today as the lender said that the Life Insurance Corporation (LIC) has completed acquisition of 51% stake in the bank.

Note that in November, the Competition Commission cleared LIC's proposed acquisition of up to 51% stake in debt-laden IDBI Bank.

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The above development would help the insurance behemoth to enter the banking space and would provide business synergies despite the IDBI Bank's stressed balance sheet.

In August, the government gave its nod for the LIC's proposed purchase of up to 51% stake in the bank.

With the deal, the insurer would have access to around 2,000 branches of the bank through which it can sell its products.

However, at Equitymaster, we believe this attempt to bail out the troubled IDBI Bank is a classic case of the state insurer buying toxic assets.

Ask an average Indian investor about the next best thing after safe bank deposits. I can bet they would tell you about LIC policies.

For generations Indians have treasured LIC policies in their safe deposit lockers like their gold and fixed deposit receipts.

Therefore, Vivek Kaul, the Editor, Vivek Kaul's Diary, believes dumping IDBI Bank on to LIC, is definitely not an example of saaf niyat, as the country has been promised.

As he writes...

  • In simple English, the government is basically unloading its junkiest bank on the insurance behemoth, and hence, on the people of this country.

    As on March 31, 2018, the bank had Rs 55,000 crore worth of bad loans. Over and above this, it has stressed loans of Rs 60,000 crore, which means that the bad loans of the bank can keep going up in the months to come.

    There is a school of thought that says that LIC should be allowed into the banking sector. But on the basis of what? What expertise does LIC have in the core-banking area?

You can read Vivek's full insight in his article titled LIC Buying IDBI Bank is Not Saaf Niyat here.

Stocks in the auto sector traded on a negative note today. Stocks such as Hero MotoCorp, Bajaj Auto, and Exide Industries were among the top losers in this space.

Speaking of the auto sector, note that one out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space.

They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times. This is evident in the chart below:

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Tanushree Banerjee, Co-head of Research at Equitymaster believes, this could be the opportunity long term investors were waiting for.

In the news from the aviation sector, Indian lenders are understood to have told Etihad that some of its conditions were unrealistic and any move to recapitalise Jet Airways and restructure the company's debts must happen within the regulatory framework.

As per the news, Etihad has agreed to come back by Wednesday.

The above development comes as Etihad Airways is seeking a hard bargain, given the imminent risk of the grounding of aircraft by lessors, thereby triggering a rapid cessation of operations.

As per the news, a report suggested that Etihad Airways CEO Tony Douglas has communicated to the lead lender that it will not pay more than Rs 150 a share for infusing funds and sought a complete exit by Naresh Goyal and his family from any management or even advisory role in the Indian carrier.

Etihad has offered to invest in the domestic airline at discounted rate of Rs 150 per share. Along with this, Etihad has also agreed to infuse US$ 35 million from Jet Privilege, where it owns majority shares but after the due diligence is completed.

Etihad Chief Executive Tony Douglas has written to State Bank of India on the restructuring plan for the airline.

As per an article in The Economic Times, Etihad has sought exemptions from the markets regulator from making an open offer and preferential pricing guidelines.

Here's an excerpt from the article:

  • In addition, Etihad is also demanding that Mr. Goyal's future role as "Chairman Emeritus" should be "well defined," stressing that no board seat should be given for Mr. Goyal himself and no rights for him or his family and affiliates to act or represent the airline.

Shares of the company rallied around 18% in last Monday's trading session on reports that the company is close to finalizing a resolution plan.

The cash-strapped airline which had its credit rating cut to default this month is weighing a resumption of stake sale talks with Tata Group as the carrier is poised to run out of cash.

The creditors are open to lending US$ 500 million to Jet Airways if Goyal and Etihad inject a similar amount into the company. A decision will be made once a forensic examination being conducted into the airline's book is completed.

Jet's woes have worsened with higher oil prices and intense competition in 2018.

This would be the second time that the West Asian airline has come to the debt-laden carrier's rescue.

To know more about the company, you can access to Jet Airways' latest result analysis and Jet Airways' 2017-18 Annual Report Analysis on our website.

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!

Read the latest Market Commentary

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Stock Market Updates

CENTRAL BANK Surges by 5%; BSE BANKEX Index Up 0.6% (Today's Market)

Feb 20, 2019 01:26 PM

CENTRAL BANK share price has surged by 5% and its current market price is Rs 30. The BSE BANKEX is up by 0.6%. The top gainers in the BSE BANKEX Index is CENTRAL BANK (up 5.1%). The top losers is INDUSIND BANK (down 0.1%).

PTC INDIA LTD Surges by 5%; BSE POWER Index Up 0.1% (Today's Market)

Feb 20, 2019 01:18 PM

PTC INDIA LTD share price has surged by 5% and its current market price is Rs 78. The BSE POWER is up by 0.1%. The top gainers in the BSE POWER Index is PTC INDIA LTD (up 5.3%). The top losers are NTPC and GMR INFRA (down 0.3%).

MINDA INDUSTRIES Surges by 11%; BSE 500 Index Up 0.6% (Today's Market)

Feb 20, 2019 01:16 PM

MINDA INDUSTRIES share price has surged by 11% and its current market price is Rs 319. The BSE 500 is up by 0.6%. The top gainers in the BSE 500 Index are MINDA INDUSTRIES (up 11.0%) and TEJAS NETWORKS LTD (up 13.5%). The top losers are HDFC STANDARD LIFE INSURANCE and ICICI PRUDENTIAL LIFE INSURANCE .

PAGE INDUSTRIES Plunges by 5%; BSE 500 Index Up 0.6% (Today's Market)

Feb 20, 2019 11:26 AM

PAGE INDUSTRIES share price has plunged by 5% and its current market price is Rs 21,771. The BSE 500 is up by 0.6%. The top gainers in the BSE 500 Index are TEJAS NETWORKS LTD (up 10.6%) and JINDAL STEEL & POWER (up 5.2%). The top losers are PAGE INDUSTRIES (down 5.0%) and KAVERI SEED (down 8.6%).

TEJAS NETWORKS LTD Surges by 11%; BSE 500 Index Up 0.7% (Today's Market)

Feb 20, 2019 10:58 AM

TEJAS NETWORKS LTD share price has surged by 11% and its current market price is Rs 142. The BSE 500 is up by 0.7%. The top gainers in the BSE 500 Index is TEJAS NETWORKS LTD (up 11.4%). The top losers are INDUSIND BANK and ASAHI INDIA (down 0.1%).

Sensex Opens Strong; Metal & Energy Stocks Lead (Today's Market)

Feb 20, 2019 09:30 am

Indian share markets open higher with Sensex up by 248 points, while the Nifty is trading up by 74 points.

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