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Of the Sell-Off in Share Markets, September Quarter Results, and Top Cues in Focus Today
Fri, 19 Oct Pre-Open

On Wednesday, share markets in India traded on a volatile note throughout the day and witnessed selling pressure during the closing hours and ended deep in red. All sectoral indices closed on a negative note, with stocks in the auto sector and realty sector leading the losses.

At the closing bell on Wednesday, the BSE Sensex stood lower by 383 points (down 1.1%) and the NSE Nifty closed down by 132 points (down 1.2%). The BSE Mid Cap index ended the day down 2.2%, while the BSE Small Cap index ended the day down by 2.1%.

Speaking of the recent sell off in the stock markets, many good companies have corrected quite a bit.

Headline indices have corrected significantly from their peaks in 2018.

These corrections are a clear sign of fear across sectors and individual stocks.

As per Research analyst, Ankit Shah, the correction could last longer.

But looking at the history of equity returns, he believes this would be just a passing correction phase.

Despite all the volatility and periodic crashes, equities are still one of the most rewarding and safe asset classes over the long run.

Top Stocks in Focus Today

From the automobile sector, Tata Motors share price will be in focus today as it is reported that the company created a separate division to explore ways to tap its entire range of passenger and commercial vehicles for offering shared mobility solutions.

As per the news, the new department will also look at collaborating with startups such as Ola, Uber and other freight aggregators. Tata Motors is the first auto maker in India to create a separate division exclusively for shared mobility as the company manufactures an entire gamut of vehicles needed for last mile connectivity ranging from small cars to trucks and buses. The division will also work on new technologies like augmented reality, virtual reality and big data to help create certain mobility solutions.

Market participants will also track ACC share price as the company on Wednesday reported a 15% YoY rise in consolidated profit after tax at Rs 2.09 billion for September quarter.

IIFL Holdings share price will also be in focus today as the company announced that its subsidiary IIFL Wealth Management acquired Wealth Advisors India, a Chennai-based wealth management firm for a total consideration of Rs 2.35 billion.

Amazon Set to Pick Stake in Future Retail

From the retail sector, market participants will also track Future Retail share price as it is reported that Amazon is set to pick up a stake in the retailer.

As per the news, the American e-commerce giant is set to pick up a stake of just under 10% in Future Retail.

Amazon is expected to pick up shares - through the foreign portfolio investors route - at a hefty premium to the prevailing share price for gaining business exclusivity and future shareholding rights

This gives Future Retail, which operates Big Bazaar and Easy Day supermarkets, a Rs 25,000-crore market value, though its 52-week record level is significantly higher.

Amazon, which is looking to expand its presence in India, already has stake in Shoppers Stop and More. Last year, retail major Shoppers Stop had announced raising Rs 1.8 billion from Amazon through an issue of equity shares on preferential basis. The deal with Amazon.com Investment Holdings LLC translated into just over 5% shareholding for Amazon in Shoppers Stop.

In September this year, Amazon said it has co-invested in Witzig Advisory Services, the entity that is acquiring Aditya Birla Retail's 'More' chain of stores in India.

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

From the Results Corner...

Hero MotoCorp Ltd reported a 3.4% year-on-year decline in net profit to Rs 9.8 billion during the September quarter (Q2FY19). The fall was seen due to higher raw material costs and other expenses amid subdued demand in key markets of Kerala and West Bengal.

The company witnessed 5.4% YoY increase in two-wheeler sales to 2,134,051 units during Q2FY19 due to reduced sales in West Bengal after that state's government made it mandatory to have a driving licence to buy a two-wheeler.

Sales in Kerala took a hit due to the floods. Recovery in rural markets in the rest of the country offset the sales slump, thanks to yet another year of normal monsoon.

Revenue, or net sales, during Q2FY19 increased by 8.5% YoY to Rs 90.9 billion.

As a consequence of increasing oil and other commodity prices like steel, Hero MotoCorp's raw material expenses for the September quarter rose 13.6% to Rs 64 billion. Other expenses went up 18.6% to Rs 9.8 billion due to higher advertisement costs. A depreciating rupee that made imports of certain materials expensive did not help either.

Consequently, earnings before Interest, Tax, Depreciation and Amortization (Ebitda), a measure of operating profit of a company, declined 5.2% YoY to Rs 13.8 billion while operating margins contracted 220 basis points to 15.2%.

From the IT sector, Infosys posted a surprise 3.2% dollar revenue growth in the September quarter (Q2FY19) as compared to the preceding three months.

This was the fastest sequential growth by India's second-largest information technology (IT) services company in more than a year.

In constant currency terms, Infosys's Q2 revenue rose 4.2% from the preceding three months.

Currency fluctuations, however, took some sheen off the company's growth as dollar revenue increased at a slower pace to US$2.92 billion in the quarter ended 30 September.

Net profit rose 0.5% to US$ 581 million in the September quarter from US$ 578 million in the preceding quarter. Operating margin was 23.7%, same as in the June quarter.

The above better-than-expected performance was largely helped by a 4.7% sequential growth from clients in the financial services space, which contributed to 32.2% of revenue.

Also, a 4.9% increase in business from retail clients, accounting for about 17% of revenue, also helped the company's performance.

More Indian Share Market Updates...

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

You can also listen to our stock market podcast. In the latest edition, we have Research Analyst, Radhika Pandit presenting a contrary view on PSU sector. She talks about good PSU stocks that you must look at. Listen in... visit SoundCloud, iTunes or Stitcher.

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