Sensex Ends 305 Points Lower; FMCG and Finance Stocks Witness Huge Selling

Mon, 22 Jul Closing | Monish Vora, TM Team

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India share markets continued to witness selling pressure during closing hours and ended their day deep in the red.

At the closing bell, the BSE Sensex stood lower by 305 points (down 0.8%) and the NSE Nifty closed down by 82 points (down 0.7%).

The BSE Mid Cap index ended the day down 0.6%, while the BSE Small Cap index ended the day down 1.2%.

Sectoral indices ended on a negative note with stocks in the finance sector and FMCG sector witnessing most of the selling pressure.

The rupee was trading at 68.96 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 1.37% and the Shanghai Composite was down by 1.27%. The Nikkei 225 was down 0.23%.

European markets were trading on a positive note. The FTSE 100 was up by 0.33%. The DAX was trading up by 0.15%, while the CAC 40 was up by 0.06%.

Market participants were tracking TVS Motor share price, Wendt share price, and Lakshmi Machine share price as these companies announced their June quarter (Q1FY20) results today.

You can also read our recently released Q1FY20 results: Bandhan Bank, Cyient, Rallis, Dabur.

In the news from the banking space, HDFC Bank share price was in focus today. The stock of the lender witnessed selling pressure on the back of moderate weakness in Q1FY20 asset quality numbers and slowdown in retail loan growth.

The private sector lender registered a 21% year-on-year (YoY) increase in profits and 23% YoY rise in net interest income with loan growth at 17% for the quarter ended June 2019.

The moderation in loan growth came due to a consistent slowdown in retail book and auto segment.

However, on the asset quality front, gross non-performing assets and net non-performing assets increased 4 basis points (bps) each sequentially to 1.4% and 0.43%, respectively.

Credit cost crossed 1% for first time for the bank due to elevated slippage ratio which stood at 2.04% in June quarter against 1.75% in Q4FY19.

Provisions for bad loans also increased significantly by 38.3% sequentially and 60.4% YoY to Rs 26.1 billion in the June quarter due to unsecured book and NBFC accounts.

Apart from the results, the bank has revised its fixed deposit interest rates on select maturities with effect from Monday, July 22.

It has revised the interest rate applicable to maturity periods such as 30-45 days, 46-60 days and one year. The bank is offering an interest rate of 5.5% to general public and 6% to senior citizens on fixed deposits of 30-45 days.

Previously, the private lender paid interest rates of 5.75% and 6.25% to the general public and senior citizens respectively.

Speaking of the banking sector, it was recently reported that the scheduled commercial banks (SCBs) credit growth moderated to 12% YoY compared with 12.7% growth in May 2019. The credit growth has improved from 10.9% at end June 2018.

Co-head of Research at Equitymaster, Tanushree Banerjee believes retail and corporate credit are expected to grow by multi-fold over the next few years.

Rising Credit Growth in India

Here's what she wrote about it in one of the recent editions of The 5 Minute WrapUp...

• One theme I strongly believe will play out over the next decade is the credit growth in India.
  
  The growth I foresee will be due to two reasons. Expanding GDP and credit penetration.
  
  Recent reforms like Jan Dhan, Mudra Yojna have helped Small and Medium Enterprises (SME's) and self-employed professionals to gain access to loans.
  
  Credit penetration is also expected to increase in this segment from current levels.
  
  Over the past few years, a lot of banks and NBFCs have started lending to this segment.

So, look out for strong well-established financial services players which will benefit the most from this trend.

In the news from the commodity space, crude oil witnessed buying interest today. Prices rose more than 2% on concerns that Iran's seizure of a British tanker last week may lead to supply disruptions in the energy-rich Gulf.

Last week, it was reported by Iran's Revolutionary Guards that they had captured a British-flagged oil tanker in the Gulf in response to Britain's seizure of an Iranian tanker earlier this month.

The move has increased the fear of potential supply disruptions in the Strait of Hormuz at the mouth of the Gulf, through which flows about one-fifth of the world's oil supplies.

Learn: How to Potentially Accumulate Rs 7 Crore in Wealth Over the Long-term

Crude oil has been trading on a volatile note this month. The commodity saw losses last week after official data showed US stockpiles of products like gasoline rose sharply earlier this month.

As per the data, US domestic crude supplies fell for a fifth straight week. According to data released by the US Energy Information Administration (IEA), US crude inventory for the week ended July 12 fell 3.11 million barrels to 455.88 million barrels.

Meanwhile, volatility was also seen on the back of ongoing geopolitical tensions in the Middle East.

Iran said that a small oil products tanker missing in the Strait of Hormuz was in its territorial waters. This stoked fraught relations with Iran's neighbors and the West over threats to shipping in the key oil chokepoint.

How this all pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Speaking of crude oil, in the video below, Vijay Bhambwani explains how trading in crude oil is an evergreen strategy. As per him, trading in crude oil offers excellent opportunities in nearly all market conditions due to its unique standing within the world's economic and political systems.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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