Sensex Ends 394 Points Lower; Telecom and Banking Stocks Witness Selling

Thu, 20 Aug Closing

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Indian share markets witnessed selling pressure throughout the day today and ended deep in the red, tracking weak global cues.

Global stock markets declined after the overnight release of July meeting minutes from the US Federal Reserve's policymaking body.

At the closing bell, the BSE Sensex stood lower by 394 points (down 1%). The NSE Nifty closed lower by 96 points (down 0.8%).

HDFC and Axis Bank were among the top losers today.

The SGX Nifty was trading at 11,296, down by 123 points at the time of writing.

The BSE Mid Cap index ended up by 0.9%. The BSE Small Cap index ended up by 0.7%.

On the sectoral front, losses were largely seen in the telecom sector and banking sector.

Asian stock markets ended deep in the red. As of the most recent closing prices, the Hang Seng ended down by 1.5% and the Shanghai Composite stood lower by 1.3%. The Nikkei ended down by 1%.

The rupee was trading at 75.08 against the US$.

Gold prices are trading down by 1.5% at Rs 51,848 per 10 grams.

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Moving on to stocks specific news, sugar stocks were in focus today. Shares of most sugar companies were trading on a positive note even as the government raised sugarcane floor price by 3.6%.

The Union Cabinet on Wednesday decided to increase the minimum price sugar mills pay to sugarcane growers, also known as Fair and Remunerative Price (FRP), by Rs 10 per quintal to Rs 285 for the next marketing year starting October 2020, according to an official statement.

According to rating agency Crisil, sugar offtake in the current sugar season is expected to remain around the same levels seen during the last season levels despite the Covid-19 pandemic. The optimism is due to buoyant exports.

The rating firm expects over 30% spurt in sugar exports to nearly 5 million tonne due to lower production in Thailand.

Other key countries which import sugar from India include Kenya, Bangladesh, Afghanistan, and Iran.

Moving on, Hindustan Aeronautics (HAL) and IRCTC were among the top buzzing stocks today.

Shares of both the state-owned companies declined up to 4% today on reports that the government is mulling to sell stake in both these firms via offer for sale (OFS) to meet its divestment target.

As per reports, the department of investment and public asset management (Dipam) has invited bids from merchant bankers and brokers to divest part of the government's shareholding of 87.4% in IRCTC.

"Bids have been sought between September 4 and 10 and they will be opened on September 11. A pre-bid meeting will be held on September 3. The government is also considering allotting shares to eligible and willing employees of IRCTC at a discount to the issue, or discovered price (lowest cut off price), subsequent to completion of the OFS," said a report by The Economic Times.

Meanwhile, the government is likely to sell around 5% of its stake in Hindustan Aeronautics within this month. At the end of June 2020 quarter, the government held 89.97% in the company, shareholding pattern shows.

As per reports, the original plan was to divest 15% holding. Besides, the process to divest part of government's stake was initiated in January this year. But the process could not be completed due to market conditions and then the spread of Covid-19.

So far this month, HAL shares have rallied over 40%. The rally in the aerospace stock came on the back of the government's 'Make in India' push in the defence sector. Recently, the Ministry of Defence approved the acquisition of 'Make in India' equipment worth Rs 87.2 billion. Of this, bulk of which will go towards purchasing the first fixed wing aircraft that HAL has designed and developed in decades.

That apart, on August 9, the Ministry of Defense (MoD) had announced a phased, year-wise embargo on the import of 101 items of defence equipment, invoking the Prime Minister Narendra Modi's Atmanirbhar Bharat initiative.

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

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

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