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Sensex Ends in Red on Post Noon Sell-off; Realty & Metal Stocks Drag
Wed, 11 Oct Closing | Rini Mehta, TM Team

Share markets in India turned negative in the noon deals with the Nifty50 slipping below its crucial 10,050 mark. At the closing bell, the BSE Sensex closed lower by 90 points. While, the NSE Nifty finished lower by 32 points. Meanwhile, the S&P BSE Midcap Index finished down by 0.9% while the S&P BSE Small Cap Index ended down by 1.2%.

BSE sectoral indices ended the day on a mixed note. Among them, oil & gas sector gained the most by 0.8%, followed by information technology sector 0.7%, while realty sector & metal sector finished down by 2% & 1.3% respectively.

Overseas, Asian equity markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.28% and the Shanghai Composite rose 0.16%. The Hang Seng lost 0.36%. European markets are mixed. The DAX is higher by 0.04%, while the CAC 40 is leading the FTSE 100 lower. They are down 0.20% and 0.04% respectively.

The rupee was trading at Rs 65.27 against the US$ in the afternoon session. Oil prices were trading at US$ 51.09 at the time of writing.

Bharti Airtel share price zoomed over 5.5% on the reports that the company has tied up with Karbonn Mobiles to offer 4G smartphone effectively at the price of a feature phone which is aimed at enabling every Indian to buy a 4G smartphone and get on to the digital superhighway.

Bank stocks ended the day in red with Andhra Bank and Syndicate Bank witnessing maximum selling pressure. Dena Bank is set to become the first bank under the Reserve Bank of India's (RBI) prompt corrective action to tap the equity market after it announced a qualified institutional placement (QIP) to raise up to Rs 4.3 billion from institutional investors.

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Reportedly, the issue committee of the bank has fixed floor price of Rs 30.73 per share. The funds raised will largely act as growth capital which Dena Bank will use to lend to retail and small and medium enterprises.

Notably, Dena follows its public-sector counterpart Vijaya Bank which raised Rs 7 billion through a similar QIP at the end of August. SBI the largest bank in India had earlier raised Rs 150 billion in the biggest such sale in June.

However, Dena's case is different because it is among six banks which have been put under prompt corrective action by the RBI restricting these lenders from announcing dividend, opening branches, hiring and giving loans to companies rated below investment grade.

The bank reported one of the weakest asset quality numbers among Indian lenders, with a gross non-performing asset ratio of 17.4% as on 30 June. Its net worth dropped to Rs 46 billion as compared with Rs 59.6 billion in financial year 2014-15.

Net loss at the end of the first quarter stood at Rs 1.3 billion as compared with a loss of Rs 2.8 billion a year ago. Dena Bank's capital adequacy ratio at the end of the first quarter stood at 11.7%, as compared with 10.8% a year ago.

Presently, the government owns 70% stake in Dena Bank.

Speaking of QIP route of equity raising, QIPs tend to be a faster way to raise capital as the dealing happens with a few investors - only institutions in this case. And this is why companies prefer this route - because of its convenience and fewer resource requirements compared to other methods of raising equity.

QIPs Poised to Scale Fresh Peak in 2017

Interestingly, QIPs are set to touch a record high in 2017. Since the beginning of 2017, QIPs have crossed Rs 340 billion.

Buoyancy in the market and positive sentiment towards primary issuances are giving confidence to companies and investment bankers to push ahead with their capital-raising plans.

With 17 offerings raising a little over Rs 340 billion in just seven months, fundraising through institutional placements will surpass the QIP record of Rs 346.7 billion set in 2009.

Dena bank share price ended up by 0.2%.

Moving on to the news from the engineering sector. Larsen & Toubro's (L&T) wholly owned subsidiary-- L&T Hydrocarbon Engineering has bagged an offshore contract for the Transportation & Installation - Daman Development Project from Oil & Natural Gas Corporation (ONGC).

Reportedly, the deal is valued at approximately Rs 11.5 billion. The Contract, won against international competitive bidding, encompasses total 'EPCIC' - Engineering, Procurement, Construction, Installation and Commissioning for the project.

The project, part of ONGC's strategy to extract gas from Daman Field, is situated in the south-western part of Tapti - Daman block in Mumbai Offshore, located at about 160-200 km North West direction from Mumbai city and 160 km West of Daman.

Notably, diversification continues to help L&T negotiate and get better terms and margins for projects. Apparently, this is because it is less desperate to win orders as compared to a company which are present in only a couple of sectors. Its reputation, extensive technical prowess, and large skilled workforce have enabled L&T to command a certain premium from customers and vendors alike.

Whether, further addition to these new projects provides a cushion to its profitability will be an interesting thing to watch out for going forward.

Subscribers can access to L&T's latest result analysis and L&T stock analysis on our website.

L&T share price ended down by 1%.

And here's a note from Profit Hunter:

Despite the broader market indices trading weak, Bharti Airtel is up 5%. This was mainly after media reports indicated that a KKR-led consortium was in talks for a tower consolidation deal involving Airtel's tower arm Bharti Infratel and Indus Towers.

Last time, we reviewed Bharti Airtel, it was trading near 450 level. This level acted as a strong resistance several times in the past ten years. Every time the stock found resistance from this level, it dragged down to trade between 250-280 levels.

The stock plunged 15% from that level to touch a low of 373 just a few days back. But today, the stock rallied 5% with above average volumes.

So, it will be interesting to see if the stock can retest the 450 level once again, or will it resume its down move to test the 250-280 level.

Bharti Airtel Surged 5% for the Day
Bharti Airtel Surged 5% for the Day 

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Mar 21, 2018 02:19 PM