Sensex Trades Over 100 Points Up; TCS & ONGC Top Gainers

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Stock markets in India are presently trading marginally higher. Among the sectoral indices, PSU stocks and metal stocks are witnessing maximum selling pressure. While, IT stocks and FMCG stocks are trading in green.

The BSE Sensex is trading higher by 98 points (up 0.3%), and the NSE Nifty is trading higher by 21 points (up 0.2%). Meanwhile, the BSE Mid Cap index is trading up by 0.3% while the BSE Small Cap index is trading up by 0.5%. The rupee is trading at 71.15 to the US$.

Cement stocks are trading on a mixed note with Heidelberg Cement & Mangalam Cement leading the pack of gainers. In the latest development, Binani Cement has become a wholly-owned subsidiary of UltraTech Cement effective Tuesday.

This follows Supreme Court's ruling on Monday upholding a National Company law Appellate Tribunal (NCLAT) order that approved the Aditya Birla group company's offer to pay about Rs 80 billion for the stressed asset of Binani Cement in an insolvency-driven process.

Reportedly, UltraTech has acquired Binani Cement's 6.25-million tonnes per annum (mtpa) plant in Rajasthan, including an integrated cement unit and a split grinding unit, for Rs 80.2 billion.

This acquisition gives the company access to superior-quality limestone reserves. Binani's subsidiaries in China and the UAE also stand transferred to UltraTech.

With the addition of the Binani asset, UltraTech's network has grown to 50 plants across India. Its overall capacity is currently at 98.75 mtpa with an additional four mtpa being commissioned.

Talking of the Insolvency and Bankruptcy Code (IBC), it is important to consider the recent successful recoveries.

If we consider two successful closures, i.e. Bhushan Steel and Electrosteel, the lenders have already recovered close to Rs 421 billion.

The government expects close to Rs 1.8 trillion through the IBC. Similarly, banks expect to write back more than Rs 1 trillion from the resolution of the 'Dirty Dozen' constituting 12 big NPA accounts referred to IBC by the RBI.

This is what the RBI said in its report on trend and progress in the banking industry:

• Banks can take advantage of the IBC to clean up their balance sheets and improve performance on a sustained basis to remain competitive. Instead of waiting for regulatory directions, banks can file for insolvency proceedings on their own to realise promptly the best value for their assets.

Research Analyst, Sarvajeet Bodas, believes that the IBC is positive for the long-term health of the banking system and it is evolving with time.

More importantly, lending in the next credit cycle will be more disciplined as a result.

Ultratech Cement share price was trading down by 1.7% at the time of writing.

Moving on to the news from the automobiles sector. Crisil Ratings in its latest report has lowered its sales growth forecast for the passenger vehicles (PVs) industry to 7-9%, from its previous estimate of 9-11% for the financial year 2019.

This came on the back of sluggish demand and higher inventory even during the festive season. It also indicated that sales of domestic PVs increased by 1.6% to 2,84,224 units in October from 2,79,877 units in the corresponding month last year, halting three months of consecutive decline.

It added that of this, the car sales volume saw a flat growth, while the utility vehicles segment registered a 4% growth.

The ratings agency has stated that the festive period, which typically contributes a fifth of annual sales, haven't exactly sparkled for automobile makers or original equipment manufacturers (OEMs).

According to the report, sales of commercial vehicles continued to grow at a double-digit rate for the 12th straight month in October, increasing 25% year-on-year. It noted that this growth was led by an 18% rise in the sales volume of medium and heavy commercial vehicles (MHCV) and a 29% rise in the sales volume of light commercial vehicles (LCV).

It pointed out that the strong growth momentum in MHCV sales volume was driven by higher growth in the tipper segment, backed by a rise in construction spending and an uptick in industrial activity.

It added that the LCVs continued to benefit from steady demand from the rural economy and the consumption-driven and e-commerce sectors.

Speaking of the bluechip auto stocks, one out of every three household in India is a buyer of their products.

They own some of the cult brands in Indian automobile space. They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times.

This could be the opportunity long term investors were waiting for.

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

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