Sensex Ends Marginally Lower; Metal and Healthcare Stocks Witness Selling

Fri, 15 Feb Closing

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Indian share markets traded on a negative note throughout the day and recovered during the closing hours to end the day marginally lower. Sectoral indices ended on a mixed note with stocks in the power sector and oil & gas sector witnessing buying interest while healthcare stocks and metal stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood lower by 67 points (down 0.2%) and the NSE Nifty closed down by 22 points (down 0.2%). The BSE Mid Cap index ended lower by 1.2% and the BSE Small Cap index ended the day down by 0.8%.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 1.9% and the Shanghai Composite was down by 1.4%. The Nikkei 225 was down 1.1%.

The rupee was trading at 71.25 against the US$.

Stocks of sugar producing companies were witnessing buying interest in today's session after the government on Thursday hiked the minimum selling price (MSP) of sugar by Rs 2 per kg to Rs 31 to help millers clear farmers' dues.

As per the news, sugar mills are expected to get a benefit of Rs 60 billion from this move.

Rajshree Sugars & Chemicals share price, Uttam Sugar Mills share price, Dhampure Specialty Sugars share price, and Riga Sugar Company share price rose around 5-9% on the back of above news.

From the airlines space, Jet Airways share price was also witnessing buying interest today after the board approved bank-led resolution plan (BLRP), entailing conversion of lenders' debt into equity.

The provisional restructuring plan (BLPRP) has been carried out by lenders, led by State Bank of India (SBI), under the Reserve Bank of India's February 12, 2018 circular.

As per an article in The Economic Times, the above lenders may seek an alternate plan at the company's meeting later this month.

Under the provisional resolution plan proposed by SBI, the total equity base of the airline is to be doubled to 227.5 million shares from 113.5 million shares at present.

Lenders are likely to convert a part of the debt by taking 114 million shares by paying a token amount of Rs 1 based on the Reserve Bank of India's guideline on restructuring. This issuance will give the lenders a majority 50.1% in the cash-strapped carrier.

Under the RBI restructuring guidelines, banks must convert their debt into equity to bring down debt levels and make interest payments more sustainable.

Jet Airways also reported its December ended quarterly results yesterday.

The airline reported a net loss of Rs 5.9 billion in the December-ended quarter, compared with a Rs 1.7 billion profit in the same quarter last year.

Revenues rose by 1% and stood at Rs 61.5 billion. Operating profit declined by 54% to Rs 4.6 billion.

The Mumbai-based carrier is a facing a severe cash crunch that has put the airline, that employs over 23,000 people, on the verge of a shutdown.

Banking stocks were witnessing selling pressure today with Yes Bank share price witnessing the most selling pressure. Other losers in the index were Punjab National Bank and HDFC Bank.

Speaking of banking sector, the Scheduled commercial banks (SCBs) credit growth moderated slightly to 14.5% YoY to Rs 943 billion as on 01 February 2019, compared with 14.6% growth a fortnight ago.

The credit growth has improved from 10.8% at end February 2018. Deposits rose 9.6% as on 01 February 2019.

The overall credit-deposit ratio eased to 77.8% as on 01 February 2019 from 77.9% a fortnight ago, while jumped from 74.9% in February 2018 with the faster growth in loans.

The investment-deposit ratio declined to 27.7% as on 01 February 2019, which is much higher above the Statutory Liquidity Ratio of 19.5%.

Also, note that the credit growth for banks is back to its 5-year high. Have a look at the chart below:

Credit Growth Back to 5 Year High

The credit growth that banks in India posted in December quarter of 2018, at 15.1% YoY, is not just very healthy. It's nearly 2 times GDP growth. But it also back to the five-year high.

Strong credit disbursal is clearly a sign of many things to come. Higher consumption demand, better capacity utilization, more capex and higher profits.

It would be interesting to see how this trend follows in 2019. Meanwhile, we will keep you updated on all the developments from this space.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.

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