NBFCs Back in Focus; Oil Prices, and Top Stocks in Action Today

Mon, 3 Dec Pre-Open

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Indian share markets ended higher for the fifth consecutive day on Friday led by a rise in realty stocks, IT stocks and healthcare stocks.

At the closing bell, the BSE Sensex stood higher by 24 points (up 0.1%) and the NSE Nifty closed higher by 18 points (up 0.2%). The BSE Mid Cap index ended up 0.6% and the BSE Small Cap index ended up by 0.5%.

Top Stocks in Action Today

From the IT sector, TCS share price will be in focus today as the company has launched 'TCS Pace Port' Tokyo, the first of several new global hubs planned under TCS Pace, a new brand identity for its research, innovation, and digital transformation services.

TCS Pace Port Tokyo will form a creative hub for Japanese customers, providing end-to-end consulting, design and implementation of digital services, and capitalizing on TCS Japan's strength.

To know more about the company, you can read TCS Q2FY19 Result Analysis and TCS Annual Report on our website.

From the banking space, SBI share price will be in focus today as the bank has given approval for the sale of 4% stake in SBI General Insurance for Rs 4.8 billion to two alternative investment funds (AIFs).

The executive committee of the Bank at its meeting held on November 29, approved the sale of 86.2 lakh shares of Rs 10 each, equaling to 4% stake in its subsidiary SBI General Insurance Company (SBI GI).

MRPL share price has reportedly inked its first term contract with Iraq as the company is looking for diversifying its crude imports. The company produces a 300,000 barrel per day refinery in the southern state of Karnataka. The company is set to buy 1.5 million tonnes of Basra oil in 2019 from SOMO.

Market participants will also track TVS Motors share price.

Reportedly, the company has launched new engine oil, 'TRU4 KRAAFT' for the Indian market. 'TRU4 KRAAFT' is a semi synthetic engine oil, which has been introduced in association with Indian Oil Corporation (IOCL).

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.

RBI Eases Norms

The Reserve Bank of India (RBI) relaxed norms for non-banking financial companies (NBFCs) to securitize their loan books. This move is likely to ease the stress in the sector which is currently facing a crisis of confidence.

Reportedly, the RBI has permitted NBFCs to securitize loans of over five-year maturity after holding them for six months on their books. The central bank has also prescribed certain Minimum Retention Requirement (MRR) for availing the relaxed norms.

NBFCs and housing finance companies are facing a crisis following the default by IL&FS in August, which led to its takeover by the government last month. This led to a liquidity crunch for the sector.

Shares of housing finance companies DHFL, Repco home finance, Indiabulls housing finance, Can Fin homes traded higher on Friday on the back of the above news.

Rupee Strengthens

The rupee climbed 21 paise to hit a three-month high of 69.64 against the US$ on Friday amid weakness against overseas currencies. Last week on Thursday, the rupee gained 77 paise to hit a three-month high of 69.85.

The rupee also gained momentum following easing crude oil prices, which slipped below $60 as investors were concerned over a supply glut.

This is a big reversal for the rupee which had hit a record low of 74.48 against the US$ on October 11.

Oil Prices Steady

Oil prices steadied on Friday on expectations that Organization of the Petroleum Exporting Countries (OPEC) and Russia will agree some form of production cuts, although increasing US supplies kept markets in check.

Surging oil production in the US, Russia and by members of the Middle East-dominated Organization of the Petroleum Exporting Countries has helped fill global inventories and create excess in some markets.

OPEC and its main partner Russia are discussing supply cuts and are due to meet in Vienna on Dec. 6 and 7 to agree production strategy.

Crude oil has lost almost a third of its value since early October because of an emerging supply glut following a global surge in production, including from the US, Russia and OPEC.

Imports of Iranian crude oil by major buyers in Asia hit a five-year low in October, as China, Japan and South Korea sharply cut purchases ahead of US sanctions on Tehran that took effect in early November.

Also, India's crude oil production was lower by 4.2% in September 2018 as compared to last year. The worrying factor is this was the lowest production this year.

Here's what Tanushree Banerjee wrote about it in one of the recent editions of The 5 Minute WrapUp...

• Comparing domestic production with the crude oil processed by refineries gives an idea of the demand supply gap. Low domestic production as compared to the demand for crude oil places a huge burden on India's import bill.
  
  Rising crude oil prices could have severe implications. Rising inflation. Rising interest rates. Pressure on the government to cut excise duty, thereby impacting its revenues.
  
  We have seen some of this play out. With elections around the corner, expect a lot of subsidies on fuel prices. This is bound to worsen India's fiscal deficit further.

It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments from this space.

From the IPO Space...

In the latest development from the IPO space, ColdEX Ltd, integrated food supply chain and distribution company, has filed draft papers with the markets regulator to float an initial public offering (IPO).

The IPO comprises fresh issue of up to 10,10,000 equity shares and an offer-for-sale of up to 16,56,408 equity stocks by SABR India Investment Pvt Ltd, according to the draft papers.

Proceeds raised through the issue will be used for investment in IT Infrastructure; fund the working capital requirements of its subsidiary Coldex Logistics; acquisitions and other strategic initiatives and general corporate purposes.

With so many IPOs set to hit the markets, we at Equitymaster believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

To know how to safely profit from the ongoing IPO rush, download this FREE report now and discover How to Get Rich with IPOs.

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

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