Sensex Trades Marginally Higher, Dow Futures Down by 33 Points

Mon, 7 Jun 12:30 pm

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Share markets in India are presently trading marginally higher.

The BSE Sensex is trading up by 90 points, up 0.2% at 52,190 levels.

Meanwhile, the NSE Nifty is trading up by 56 points.

Adani Ports and Tata Motors are among the top gainers today. Bajaj Finance and Bajaj Finserv are among the top losers today.

The BSE Mid Cap index is trading up by 1%.

The BSE Small Cap index is trading up by 1.3%.

On the sectoral front, barring the finance sector, all sectors are trading in green with stocks from the utilities sector and power sector, witnessing most of the buying interest.

US stock futures are trading lower today, indicating a negative opening for Wall Street.

Nasdaq Futures are trading down by 30 points (down 0.2%) while Dow Futures are trading down by 33 points (down 0.1%).

The rupee is trading at 72.80 against the US$.

Gold prices are trading down by 0.3% at Rs 48,833 per 10 grams.

In international markets, gold prices moved lower, hurt by a stronger US dollar. Spot gold was down 0.2% at US$ 1,886.8 per ounce. However, softer US bond yields capped losses in the precious metal.

Amid muted global cues, gold prices in India edged lower today On MCX, gold futures were down 0.1% to Rs 48,953 per 10 grams.

Note that in India, gold rates turned volatile after they hit near a five-month high of Rs 49,800 last week. In August 2020, gold had risen to a record high of Rs 56,200.

To know more about gold, check out our article on how to invest in gold here: How to Invest in Gold?

Moving on to stock specific news...

Among the buzzing stocks today is TVS Motor Company.

Shares of TVS Motor Company were up 6% on the NSE in intra-day trade today after more than a 5% stake of the two-wheeler company changed hands via a block deal. The stock was trading close to its 52-week high level of Rs 666 touched on 27 May 2021.

Around 24.4 m shares, representing 5.2% of the total equity of TVS Motor Company, worth Rs 15.1 m changed hands, exchange data shows. The block deal was executed at a price of Rs 617.2 per share.

TVS Motor promoter Sundaram Clayton holds a 57.4% stake in the company.

In December 2020, the board of directors of the US$ 8.5 bn TVS Group had approved the so-called memorandum of family arrangement (MFA) between various members of the TVS family.

Present shareholders of the holding companies primarily consist of third and fourth generation family members of TVS Group founder TV Sundaram Iyengar.

The group in February 2021 filed a composite scheme of amalgamation and arrangement involving its holding companies at the National Company Law Tribunal in Chennai.

The restructuring will give each family group complete ownership of businesses they manage while scrapping the holding company. According to the new terms, the family has agreed to scrap any cross-holdings. Share buyouts among the family members have already started.

The restructuring will involve nine listed companies, including TVS Motor, Sundaram Clayton, Sundram Fasteners, TVS Electronics and TVS Srichakra, among others.

We will keep you posted on more updates from this space. Stay tuned.

At the time of writing, TVS Motor Company shares were trading up by 2.6% on the BSE.

Speaking of the stock markets, India's #1 trader, Vijay Bhambwani talks about his next trade recommendation, in one of his latest videos for Fast Profits Daily.

Tune in here to find out more:

Moving on to news from the finance sector...

Bajaj Finance Share Price Falls Nearly 4% as Company Highlights Asset Quality Woes

Shares of non-banking finance company Bajaj Finance fell nearly 4% today after the company said it may see higher non-performing assets in the first six months of 2022 due to the Covid-19 induced lockdowns.

The company has provided an update on the estimated impact of the second wave of the pandemic on the company's financials in 2022.

"Forward flows across overdue positions were higher due to constraints on collections amidst strict lockdowns across most parts of India. As a result, the company estimates its GNPA (gross non-performing asset) and NNPA (net non-performing asset) in Q1 and Q2 to be higher, " company said in its mid-quarter update.

The company estimates an incremental credit cost of Rs 110-130 bn versus planned credit cost in 2022 on account of disruption caused by the second wave.

The company's B2B and auto finance businesses were the most affected due to strict lockdowns in majority of states. These businesses delivered 70% of their planned volumes in April 2021 as multiple states started imposing lockdowns from mid April. Their volumes have dropped to 40% in May 2021, it added.

Other lines of businesses were less impacted in April and delivered 85% of planned disbursements.

The company also estimates an impact of Rs 400-500 bn to its assets under management (AUM) growth plan for 2022 for the same reason.

However, the June quarter will see higher impact on AUM due to lower volumes in B2B businesses, company said.

To partially mitigate the financial impact caused by lower AUM growth, the company has taken several actions to reduce its operating expenses and cost of funds.

How the company's asset quality performs in the June quarter remains to be seen. Meanwhile stay tuned for more updates from this space.

Speaking of the current stock market scenario, note that the BSE Smallcap index touched life-time high recently.

Despite the index being up more than 157% since the March 2020 lows, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2021 and beyond.

Here's why...

As per Richa, the smallcap to Sensex ratio is a good metric to gauge while coming to some conclusions about relative valuations.

So, what is this indicator suggesting now?

As you can see from the chart below, the ratio currently stands at 0.46 times, as compared to long term average of 0.43 times.

Here's what she wrote about it in a recent edition of Profit Hunter:

• In the last one year, the smallcaps have done well to cover the gaps with the large peers.
  
  But it could be premature to call this a peak.
  
  In the previous two rounds, the average ratio has been 0.57, suggesting more upside from these levels.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

And 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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