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Stock Market Crash, Yes Bank Crisis, and Top Cues in Focus Today
Mon, 9 Mar Pre-Open | Monish Vora, TM Team

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It was mayhem on Dalal Street on Friday as India share markets traded deep in the red, tracking a sell-off in global markets as a new wave of fear about the spread of the coronavirus and its economic impact gripped investors.

The BSE Sensex cracked over 1,450 points in Friday's opening trade while the NSE Nifty plunged below the 10,900-mark at one go.

Selling pressure also intensified as the Reserve Bank of India (RBI) superseded the board of Yes Bank and imposed a 30-day moratorium on it in the absence of a credible revival plan.

At the closing bell on Friday, the BSE Sensex stood lower by 893 points (down 2.3%) and the NSE Nifty stood down by 289 points (down 2.6%).

The BSE Mid Cap index ended the day down 2.4%, while the BSE Small Cap index stood down by 1.9%.

All sectoral indices ended in the red with stocks in the banking sector, realty sector and metal sector leading the losses.

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Speaking of the current stock market scenario, market participants are seen taking flight to safety as stock markets see a sharp fall post the Coronavirus impact.

Here's what Tanushree Banerjee wrote about the situation in a recent edition of The 5 Minute WrapUp...

  • While manufacturers dependent on China are expected to take a hit globally, the short-term impact is also likely to be felt on sectors like travel and tourism.

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All About the Crisis at YES Bank

The Reserve Bank of India's (RBI) decision to put YES Bank under moratorium led to the biggest ever fall in shares of the private lender on Friday. Two hours into the trading hours, the stock extended its slide to 85%, as it hit a low of Rs 5.55. This was the biggest slide for the stock ever.

RBI said it has superseded the board of YES Bank for a period of 30 days, owing to serious deterioration in the financial position of India's fifth largest private bank.

The RBI expects to arrive at a credible restructuring plan in the next few days.

The RBI action follows the lender's inability to raise funds that would have helped it provide against loan losses. Prashant Kumar, former deputy managing director at State Bank of India (SBI), will be the administrator of Yes Bank.

Depositors will be restricted to a maximum withdrawal of Rs 50,000 even if they have multiple accounts, a government gazette notification said.

RBI will relax the withdrawal limit in the event of medical emergencies, higher education fees or marriage expenses - up to a cap of Rs 5 lakh. Drafts and pay orders issued so far will be paid in full, the reports noted.

Risk-averse market participants also fled the equity markets as cascading effect of the above decision was seen everywhere. Banking indices also witnessed huge selling pressure.

Tanushree Banerjee has offered some facts and insights on Yes Bank in today's edition of The 5 Minute WrapUp. You can check the same here: Should You Buy Yes Bank or Short SBI?

New: 5 Pandemic-Proof Smallcaps You Should Know About...

IPO Buzz: SBI Cards and Anthony Waste Handling Cell IPO

In latest developments from the IPO space, the Rs 2.1 billion initial public offer (IPO) by Antony Waste Handling Cell got subscribed by 13% on March 5, day 2 of the bidding process.

The issue saw bids for 6,45,100 shares compared with the issue size of 48,20,508 shares. The price band of the issue is set at Rs 295-Rs 300 per equity share.

The offer includes fresh issue of up to Rs 350 million worth of equity shares and an offer for sale of up to 57,00,000 shares.

The company has already garnered Rs 609.4 million from 3 anchor investors.

The issue will close for subscription today.

Meanwhile, the IPO of SBI Cards and Payment Services managed to attract bids worth Rs 2 trillion, despite challenging market conditions.

The 100-million share offering generated close to 2.7 billion bids. The high net worth individual (HNI) portion of the IPO was subscribed 44 times, while the retail portion was subscribed 2.5 times.

The employee segment registered 4.7 times subscription, while the shareholder category was subscribed 25 times, making it a rare instance in which the employee and shareholder segments garnered higher subscription than the retail segment.

The institutional portion of the IPO garnered 57 times subscription.

Given the huge oversubscription, shares of SBI Cards will be priced at the upper end of the price band of Rs 750-755 per share.

Taking the upper end of the price band, SBI Cards' post-issue market capitalisation would be around Rs 710 billion, making it India's 38th most valuable company.

Through the share sale, the company issued fresh capital worth Rs 5 billion. State Bank of India (SBI) sold its 4% stake, while Carlyle sold 10% in the firm.

SBI Card's total credit card spends grew at a compounded annual growth rate of 54.2% over FY17-FY19 compared with an industry average of 35.6%.

The credit card-to-debit card ratio for SBI Cards stands at 3.7% compared with 45% of HDFC Bank, 28% for Axis Bank and 18% for ICICI Bank.

To know more the SBI Cards' business, the credit card industry, and whether you should apply to this IPO, you can read one of Ankit's latest notes here: SBI Cards IPO: Apply or Avoid? (requires subscription).

10 PSBs Approve Merger to Create 4 Large Banks

The boards of 10 public sector banks approved mergers and issued share-swap ratios to create four large banks in the economy.

The merger will be effective from April 1.

The four anchor banks will be Punjab National Bank (PNB), Canara Bank, Union Bank of India, and Indian Bank.

According to notifications to the stock exchanges, PNB will issue 1,150 shares for 1,000 shares of Oriental Bank of Commerce, and 121 shares for 1,000 shares of United Bank of India.

Meanwhile, Union Bank of India will issue 325 shares for 1,000 shares of Andhra Bank, and 330 shares for 1,000 shares of Corporation Bank.

Allahabad Bank said for every 1,000 shares of Allahabad Bank, there would be 115 shares of Indian Bank.

Last year, Bank of Baroda took over Vijaya Bank and Dena Bank. Before that, State Bank of India (SBI) had merged all its five associate banks with itself to enter the global top 50 banks' list in terms of size.

The Union Cabinet had approved the consolidation to build the mega banks to create more efficient and bigger public sector banks in the challenging environment to meet the credit needs of a growing economy and to achieve operational efficiency by scale of business.

As per reports, the amalgamation will lead to a wide geographical reach, technology adaption, and, more importantly, better utilization of scarce capital.

Speaking of PSBs, which banks look the best match post the latest matchmaking of PSU banks?

Needless to say, most investors would also be worried about the level of NPAs and current and savings accounts (CASA) of the merged entities.

Lower NPA ratio and sustenance of high CASA, in the future, could signal the banks' fitness levels to lend more.

But what could go unnoticed is the efficiency potential of the merged entities.

Post-merger, the employee per branch ratio of the consolidated PSU entities could be in the range of 7 to 9 per branch. This would be almost half that of their private sector counterparts like HDFC Bank and Kotak Bank.

India's Top 6 Public Sector Banks Are Getting Fitter

Leaner operations would mean use of technology to support growth.

So, we would not be surprised if the PSU entities leverage technology at a much bigger scale than their private sector peers, in a few years.

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

SIEMENS Share Price Up by 11%; BSE CAPITAL GOODS Index Down 0.1% (Today's Market)

Nov 26, 2020 02:08 PM

SIEMENS share price is trading up by 11% and its current market price is Rs 1,512. The BSE CAPITAL GOODS is down by 0.1%. The top gainers in the BSE CAPITAL GOODS Index is SIEMENS (up 10.8%). The top losers are SADBHAV ENGINEERING (down 0.1%) and SKF INDIA (down 0.4%).

DIXON TECHNOLOGIES at All Time High; BSE CONSUMER DURABLES Index Up 0.7% (Today's Market)

Nov 26, 2020 01:48 PM

DIXON TECHNOLOGIES share price has hit an all time high at Rs 11,280 (up 3.3%). The BSE CONSUMER DURABLES Index is up by 0.7%. Among the top gainers in the BSE CONSUMER DURABLES Index today are DIXON TECHNOLOGIES (up 3.3%) and TITAN (up 1.1%). The top losers include TTK PRESTIGE (down 0.4%) and CROMPTON GREAVES CONSUMER ELEC. (down 0.9%).

INFO EDGE at All Time High; BSE IT Index Up 0.1% (Today's Market)

Nov 26, 2020 01:32 PM

INFO EDGE share price has hit an all time high at Rs 4,102 (up 0.8%). The BSE IT Index is up by 0.1%. Among the top gainers in the BSE IT Index today are INFO EDGE (up 0.8%) and TCS (up 0.5%). The top losers include HEXAWARE TECHNOLOGIES and ECLERX SERVICES .

SHEELA FOAM Share Price Up by 10%; BSE FMCG Index Up 0.3% (Today's Market)

Nov 26, 2020 01:18 PM

SHEELA FOAM share price is trading up by 10% and its current market price is Rs 1,519. The BSE FMCG is up by 0.3%. The top gainers in the BSE FMCG Index is SHEELA FOAM (up 10.2%). The top losers are GODREJ AGROVET and TATA COFFEE (down 0.2%).

SWAN ENERGY Share Price Up by 10%; BSE 500 Index Up 0.2% (Today's Market)

Nov 26, 2020 01:02 PM

SWAN ENERGY share price is trading up by 10% and its current market price is Rs 156. The BSE 500 is up by 0.2%. The top gainers in the BSE 500 Index is SWAN ENERGY (up 10.5%). The top losers are HPCL and HUL .

Sensex Opens Marginally Higher; L&T and Bajaj Auto Top Gainers (Today's Market)

Nov 26, 2020 09:30 am

Indian share markets open marginally higher. The BSE Sensex is trading up by 101 points, while the Nifty is trading higher by 37 points.

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Nov 26, 2020 02:32 PM