Sensex Zooms 646 Points; Banking and Telecom Stocks Rally

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Indian share markets moved sharply higher in the afternoon trade today, led by gains in banking stocks. Shares of IndusInd Bank, State Bank of India, ICICI Bank and Kotak Mahindra Bank climbed 4%-6%.

Investor sentiments were boosted as Union Minister Prakash Javdekar announced a hike in dearness allowance to 17% from 12%, which is likely to benefit 5 million government employees and 6.2 million pensioners.

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

At the closing bell, the BSE Sensex stood higher by 646 points (up 1.7%) and the NSE Nifty closed higher by 187 points (up 1.7%).

The BSE Mid Cap index ended up by 1.4%, while the BSE Small Cap index ended the day up by 0.7%.

Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng was down 0.8% and the Nikkei stood lower by 0.6%.

The rupee was trading at 70.97 to the US$ at the time of writing.

In news from the banking sector, Yes Bank share price was in focus today after the lender denied reports suggesting active talks between the bank and Microsoft Corporation and two other tech firms for a possible stake acquisition.

The lender in a regulatory filing said it is not aware of the source, which resulted in the news item and as a matter of policy, the bank would not like to comment on such article.

The private lender clarified that it continues to explore various means of raising capital and funds through the issuance of securities to a diverse set of investors, in order to meet its business regulatory requirements.

On Monday, news reports claimed that Microsoft is among three investors, which are in talks for a stake in Yes Bank.

The stock of Yes Bank has been under pressure ever since the RBI curtailed its promoter-chief executive Kapoor's term on corporate governance concerns. Many of the bank's past lending bets under Kapoor are haunting the earnings now and keeping the share prices depressed.

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

Speaking of the banking sector, the recent Punjab and Maharashtra Co-operative bank fiasco has put small savers in the limelight yet again.

These banks have poor lending practices. Depositors have had to pay the price time and again.

In the short run, this has an adverse effect on microfinance lending as well. Micro finance institutions (MFIs) are skeptical about lending to even genuine borrowers in an uncertain environment.

But this is actually a blessing in disguise for MFIs with strong business practices.

After all, last mile connectivity in lending is still a huge opportunity.

Huge Opportunity in Last Mile Lending in India

Here's what Tanushree Banerjee wrote about this in a recent edition of The 5 Minute WrapUp...

• The average ticket size of a microfinance borrower in India is around Rs 38,000 which is much lower than the global average (Rs 65,000).
  
  The sector itself has grown at an average annual rate of 27% for the last 4 years.
  
  Still states like Uttar Pradesh, Bihar, and Madhya Pradesh with a large rural population are highly under-penetrated even today.

A private bank that is part of Tanushree's 7 stocks to buy list has already taken a step in this direction.

It will be a big beneficiary when the microfinance boom plays out in India.

In other news, Raymond share price was also in focus today. The stock of the company witnessed buying interest after its associate company signed an agreement to sell its property in Thane.

The company in a BSE filing said that the associate company JK Investo Trade (India) (JKIT) has entered into an agreement for sale (AFS) for its property measuring 78,310 square meters (around 20 acres) located at Village Panchpakhadi, Thane (West) with an affiliate of Virtuous Retail South Asia Pte Ltd (VRSA) - Elpis Ventures.

The company agreed to sell the property for Rs 7 billion subject to payment of taxes, cost of approval as applicable.

From the pharma sector, market participants were also tracking Glenmark Pharma share price after it was reported that the company has received tentative approval by the United States Food and Drug Administration (USFDA) for Dimethyl Fumarate delayed-release capsules.

The company stated the approval to Glenmark Pharmaceuticals Inc, USA has been granted for 120 mg and 240 mg of Dimethyl Fumarate delayed-release capsules, a generic version of Tecfidera capsules of Biogen Inc.

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

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