Sensex Trades Flat; RBI Cuts Repo Rate by 35 bps

Wed, 7 Aug 12:30 pm

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Share markets in India are presently trading on a volatile note after the Reserve Bank of India's monetary policy committee (MPC) reduced the repo rate by 35 basis points (bps) to 5.40%. This was the fourth straight rate cut by the central bank in 2019.

The last time RBI made such consecutive cuts was after the global financial crisis over a decade ago, when most major central banks were desperate to revive economic growth.

Sectoral indices are trading mixed with stocks in the metal sector and energy sector witnessing selling pressure, while healthcare stocks and IT stocks are witnessing buying interest.

The BSE Sensex is trading down by 33 points while the NSE Nifty is trading down by 14 points. The BSE Mid Cap index is trading up by 0.4%, while the BSE Small Cap index is trading up by 0.8%.

The rupee is currently trading at 70.90 against the US$.

Market participants are tracking Cipla share price, HCL Technologies share price, and Tata Steel share price as these companies are set to announce their June quarter (Q1FY20) results later today.

You can read our recently released Q1FY20 results of some other companies here: Bata India, Venkys India, Berger Paints, Torrent Power, Kolte Patil.

In news from the finance sector, shares of Indiabulls Housing Finance slipped 9% in early trade today after the company reported weak earnings and worsened asset quality during Q1FY20.

The non-banking finance company (NBFC) posted 24% year-on-year (YoY) drop in consolidated net profit at Rs 8 million in Q1FY20. It had a profit of Rs 10.6 billion in the year-ago quarter.

The company's total income fell to Rs 38.9 billion during the June quarter as against Rs 40.7 billion in the year-ago period.

Net interest income during the quarter declined 13% at Rs 14.8 billion from Rs 16.9 billion in the corresponding quarter of previous fiscal.

The company's assets quality worsened during the quarter with gross non-performing asset (NPA) ratio rising to 1.47% from 0.88% in March 2019 quarter. Its net NPA ratio increased to 1.1% from 0.69% in the preceding quarter.

Loan books were down 10% YoY to Rs 1.13 trillion.

The company said it has received an approval from the Competition Commission of India (CCI) for the proposed merger with Lakshmi Vilas Bank in June 2019. It has made application for approval merger to the Reserve Bank of India and stock exchanges and is waiting for the approval.

Indiabulls Housing Finance share price is presently trading down by 8.2%.

Moving on to news from the retail sector, Titan on Tuesday reported a 10.8% rise in its consolidated net profit at Rs 3,637.4 million in the first quarter ended June 2019.

Total consolidated income rose 16% YoY to Rs 52,081.7 million in Q1FY20. Reports state that company's growth was backed by a healthy growth in the watches division though sales in jewellery segment took a hit. Company's watches division grew 20% to clock a revenue of Rs 7,150 million.

The Tata Group company said that its profit growth was subdued due to investment in one biennial overseas conference for its business associates, apart from a one-time wage settlement with some its unionized employees.

The jewellery division logged a moderate growth of 13% to Rs 40,470 million. Growth in the jewellery segment was adversely impacted due to high gold prices, especially during June, the company said.

Titan's eyewear business grew 13% to Rs 1,490 million, while its other businesses comprising accessories, fragrances and sarees grew 38% to clock revenues of Rs 360 million.

Titan share price is presently trading down by 2.6%.

Here's an interesting data on Titan, every Rs 100 invested in the company in 2002 would have multiplied 330 times by 2019!

Every Rs 100 Invested in Titan in 2002 Multiplied 330 Times by 2019

Co-head of Research, Tanushree Banerjee believes the opportunities in the Rebirth of India are not only more profitable than the ones in 2002 but the gains could come faster too.

Here's what she wrote in today's edition of The 5 Minute WrapUp...

• Titan entered the branded jewellery market in 1996.
  
  The retailer faced the challenge of breaching a well-entrenched network of family jewellers. The relationship between customer and family jewellers went back to a couple of generations.
  
  The habit of buying from the family jeweller was strong and the trust was intrinsic. One also had the option of returning old jewellery to the family jeweler.
  
  Through its jewellery brand, Tanishq, Titan broke down the early entry barriers in unorganized jewellery retailing. It consolidated its lead as very few national or branded players threw their hats in the ring.

She is on the hunt for the next set of Titan, HDFC Bank, Bajaj Finance, Asian Paints-like companies. These will be the companies that would catalyze the transformation she call the Rebirth of India.

In fact, she has shortlisted 7 stocks that will benefit the most when these trends playout.

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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