Sensex Ends 110 Points Lower; Banking & Metal Stocks Witness Selling

Wed, 18 May Closing

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After opening on a firm note, Indian share markets failed to keep up early gains and ended the day on a flat note.

Benchmark indices ended the volatile session with marginal losses as banking stocks came under pressure.

At the closing bell, the BSE Sensex was down by 110 points, ending 0.2% lower.

Meanwhile, the NSE Nifty was down 19 points, ending almost flat at 16,240.

Ultratech Cement, HUL, and Asian Paints were among the top gainers today.

Power Grid, Tech Mahindra, and SBI were among the top losers today.

In the broader market, the BSE Mid Cap index declined 0.1% while the BSE Small Cap index was up 0.3%.

Among sectoral indices, buying was witnessed in the FMCG sector and pharma sector, while stocks in the banking sector, IT sector, and metal sector witnessed most of the selling.

Shares of ESAB and MRPL hit their 52-week highs today.

Outside the home ground, Asian share markets posted mixed signals as weak economic data from China and rising inflation concerned investors.

At the close in Tokyo, the Nikkei 225 jumped by 0.9%, while the Hang Seng rose marginally by 0.1%. The shanghai composite was down 0.3%.

The SGX Nifty was trading 0.1% lower at the time of writing.

The rupee is trading at 77.55 against the US$.

Gold prices are currently trading flat at Rs 50,162 per 10 grams while silver is up 0.1% at Rs 61,194 per kg.

Speaking of the current stock market scenario, amid the ongoing volatility, have a look at the two charts below, in the order they have been placed:

Near Term Volatility in Sensex Compensated by Long Term Gains

The year-on-year change in the Sensex was hardly predictable but someone who stayed invested multiplied every lakh nearly 14 times.

Timing the markets could be suicidal as valuations and volatility put the markets in a see-saw mode.

As an individual investor, you need to sit tight over high conviction stocks and invest consistently to see the magic of compounding.

Because 2022 could be extremely profitable, over time, provided you reset your portfolio with the right kind of safe assets and safe stocks.

In news from the FMCG space, Ruchi Soya is set to acquire the food retail business of Patanjali Ayurveda.

The business undertaking consists of manufacturing, packaging, labeling, and retail trading of certain food products.

It also includes manufacturing plants located at Padartha, Haridwar, and Newasa, Maharashtra. But this is subject to the approval of shareholders and other authorities.

The amount of consideration for the acquisition is Rs 6.9 bn on a slump sale basis and the indicative period for completion of the deal is 15 July 2022.

According to the company's filing with the exchange, the transaction shall consist of transfer of employees, assets (excluding Patanjali's brand, trademarks, designs, and copyrights), and current assets (excluding debtors, vehicles, cash, and bank balance).

The board of Ruchi Soya has decided to change the name of the company to 'Patanjali Foods Limited' subject to statutory and regulatory approvals.

Back in 2017, Ruchi Soya was facing bankruptcy after incurring Rs 120 bn in debt and suffering significant losses. Following this, a protracted bidding war began, with Ramdev's Patanjali Ayurveda emerging as the winner in 2019.

After taking over the diversified fast-moving consumer goods (FMCG) firm, the new owners have rapidly planned a turnaround. The company has turned profitable and its debt has significantly decreased.

Patanjali Ayurveda had disclosed plans to transfer all food business to Ruchi Soya before floating its FPO in 2020.

Ruchi Soya share price climbed 10% intraday on the BSE.

Speaking of stock markets, Chartist Brijesh Bhatia discusses whether you should take a close look at Asian Paints, in his latest video for Fast Profits Daily.

Crude oil prices have remained high above US$100. This has increased input prices for paint companies.

So, is Asian Paints, the leader in the category, buy at current levels? Brijesh answers this in the below video.

Tune in to find out more:

Moving on to news from the banking sector, Yes Bank's asset reconstruction company (ARC) deal is in its final stage and could be announced soon.

As per reports, the private lender is engaged in two separate deals to completely resolve its bad debt issue and capital requirements.

Yes Bank is progressing with the ARC carve out and its sale to stressed funds for which the bank is negotiating with Cerberus and JC Flowers.

On the other hand, private equity firms Carlyle and Advent, are said to be in talks with Yes Bank to buy a minority stake.

According to sources, the valuation of the equity deal will be in sync with the derived value of the bad loan via the ARC deal in which Rs 500 bn of bad assets is being carved out of which 70-75% has already been provided for by the bank.

Sources also shared that Cerberus and JC Flowers have bid for the ARC valuing the Rs 500 bn bad loan at around Rs 110-130 bn.

The ARC deal is critical for any equity infusion in the bank for two reasons, first, ascertaining the value of the bad loan and future recovery visibility. Second, Resolving the asset quality concern and taking the bad loan out of the books.

This two-pronged deal structure of carving out bad loans and getting capital infusion is likely to provide a complete resolution to the bank which was bailed out by the State Bank of India under the supervision of the RBI.

As of today, none of the parties involved have made any public statement about these developments.

Yes Bank share price ended 4% up on the BSE today.

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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