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Indian Indices Continue Sell-Off; Sensex Slumps Over 530 Points
Mon, 24 Sep Closing

Share markets in India continued their sell-off seen during the last week and ended the day deep in the red. All sectoral indices traded on a negative note, with stocks in the realty sector, auto sector, telecom sector, and finance sector witnessing most of the selling pressure.

At the closing bell, the BSE Sensex stood lower by 536 points (down 1.5%) and the NSE Nifty closed down by 168 points (down 1.5%). The BSE Mid Cap index ended the day down 2.4%, while the BSE Small Cap index ended the day down 2.7%.

The rupee was trading at Rs 72.59 against the US$ in the afternoon session.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was down by 1.7% and the Shanghai Composite was up by 2.4%. The Nikkei 225 was up by 0.8%. Meanwhile, European markets were trading on a negative note. The FTSE 100 was down by 0.2%. The DAX was down by 0.3%, while the CAC 40 was down by 0.2%

Speaking of the sell-off seen in the Indian stock markets, in our latest edition of the stock market podcast, Apurva Sheth, our lead Chartist and Editor of the premium newsletter, Profit Hunter Pro joins us to share his technical view on the massive stock market crash that we witnessed on Friday.

He also talks about the stocks that could create value in such times. Listen in...visit SoundCloud, iTunes or Stitcher.

In the news from the pharma sector, Cipla share price was in focus today after it was reported that the US drug market regulator, USFDA, is carrying out a surprise inspection at the company's Goa facility.

NBFCs were witnessing selling pressure today on worries over tight liquidity with shares of CanFin Homes and PNB Housing witnessing most of the brunt.

In the latest development from this space, assuring lending support to non-banking financial companies (NBFCs), SBI Chairman Rajnish Kumar said there was no concern on liquidity of such firms, amid ongoing debt crisis in Infrastructure Leasing & Financial Services (IL&FS) Group.

Note that shares of housing finance companies came under sudden heavy selling pressure on Friday as investors raised concerns over rising cost of borrowing for the companies amid the crisis at IL&FS.

Housing Finance Stocks Take a Beating


Reportedly, the fall in NBFCs' scrips was attributed to tightness in money market and a lack of clarity on IL&FS exposure.

Earlier this month, it came to light that IL&FS group defaulted on a short-term loan of Rs 10 billion from SIDBI, while a subsidiary has also defaulted Rs 5 billion dues to the development finance institution.

While IL&FS has nearly Rs 350 billion consolidated debt, IL&FS Financial Services has Rs 170 billion of debt, which sits as standard asset for most of the lenders, the reports noted.

The group has seen its various long-term and short-term borrowing programmes downgraded to 'default' or 'junk' grades by credit rating agencies, even as the regulators are also probing alleged delay in disclosure about certain loan defaults.

According to Moody's Investor Services, IL&FS's outstanding debentures and commercial paper accounted for 1% and 2%, respectively, of India's domestic corporate debt market as of 31 March 2018. Its bank loans made up about 0.5% to 0.7% of banking system loans.

There are concerns that the defaults by IL&FS could cause a contagion in the Indian financial sector. It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments form this space.

From the commodity space, crude oil was witnessing buying interest today. Gains were seen as US sanctions restricted Iranian crude exports and also on the back of tightening global supply.

Note that crude oil prices are witnessing buying interest lately. This doesn't bode well for the Indian economy, as it not only affects fuel prices, but also has many other repercussions on the macroeconomic level.

Rising crude oil prices can be a big worry for the Modi government as well as it has been a big beneficiary of lower crude oil prices.

Apart from that, what does rising crude oil prices mean for stock markets?

Richa Agarwal, editor of Hidden Treasure, tracks the oil and gas sector very closely. She believes the rise in crude oil prices is a bearish sign for stock markets globally. At the same time, any market correction, will throw up interesting buying opportunities in small-cap stocks.

This is what she wrote...

  • After hitting a low of US$ 30 per barrel in January 2016, prices have more than doubled this year.While the Hidden Treasure team looks for long-term wealth creators, such macro situations can help to recommend such stocks at a bargain. The ones who keeps calm, when everyone else is losing their heads, will gain the most when the tide turns.

It would be interesting to see how Iranian sanctions will influence crude oil prices. Meanwhile, we will keep you posted on all the updates from this space.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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