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Sensex Trades Higher; Kotak Mahindra Bank Surges 10%
Fri, 7 Dec 12:30 pm | Monish Vora, TM Team

Share markets in India are presently trading on a positive note. Sectoral indices are trading mixed with stocks in the bank sector and FMCG sector witnessing maximum buying interest while oil & gas stocks and PSU stocks are witnessing selling pressure.

The BSE Sensex is trading up by 181 points (up 0.5%), while the NSE Nifty is trading up by 46 points (up 0.4%). The BSE Mid Cap index is trading on a flat note and the BSE Small Cap index is trading down by 0.2%.

The rupee is trading at Rs 70.54 against the US$.

In the news from the IT sector, HCL technologies share price is witnessing selling pressure today after the company said it is acquiring select IBM software products for $1.8 billion.

On Thursday, International Business Machines Corp said that it will sell some of its software products business to HCL technologies. This is the largest acquisition in the history of HCL which is expected to close by mid-2019.

Reportedly, the software products in scope represent a total addressable market of more than $50 billion. The company will divest seven of its products which include BigFix, Unica and workstream collaboration product Connections.

To know more about the company, you can access HCL Tech Q2FY19 result analysis and HCL Tech Annual Report on our website.

In the news from the aviation space, Jet Airways share price is in focus today on news that Etihad Airways has offered to finance as much as $200 million to Jet Airways to keep the airline operational.

The cash-strapped airline is already behind schedule on payment of its aircraft lease rentals and has not paid staff salaries in full for the past few months.

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Earlier this week, it cancelled 14 flights after pilots did not turn up for duty, protesting salary dues. Reportedly, the customers are not getting refund even for flights cancelled by the airlines.

Rating agency ICRA downgraded the airline's credit rating to 'B' which is assigned to loan facilities with high risk of default.

The company's financial woes have worsened by rising crude oil prices and intense pricing competition in the domestic aviation industry.

The company has been going through severe financial crush since last year. It has suffered three consecutive quarterly losses and is currently trying hard to make its turnaround plan aimed at reducing operational costs.

Jet Airways share price has fallen more than 66% since January and is presently trading up by 1.3%.

To know more about the company, you can access to Jet Airways' latest result analysis and Jet Airways' 2017-18 Annual Report Analysis on our website.

Moving on to the news from the banking space, shares of Kotak Mahindra bank jumped around 11% on reports that Warren Buffett's Berkshire Hathaway Inc is planning to invest about $4 billion to $6 billion in the bank.

Reportedly, Berkshire Hathaway may invest in the lender by buying promoter stake or through a preferential allotment.

As per RBI guidelines, Uday Kotak needs to dilute his stake to below 20% by December 2018 to ensure a wider ownership of banks. Earlier, Uday Kotak had sought Reserve bank of India's (RBI) permission to bring down his stake in the bank to 20% from the current 30% by selling nonconvertible perpetual noncumulative preference shares (PNCPS) to a group of investors in August 2018. RBI, however, shot down this arrangement.

Speaking of corporate banks, Sarvajeet offers an interesting observation on a corporate bank stock.

Here's what he wrote in one of the recent editions of The 5 Minute WrapUp...

Corporate banks have underperformed retail-focused banks in the last five years. The chart below shows the annualised returns of the last five years.

Corporate Banks Underperforming Retail-focused Banks

Retail-focused banks such as HDFC Bank and Kotak Mahindra bank performed significantly better compared to corporate banks. One of the important reasons for this outperformance is stable asset quality. They could maintain gross NPAs below 1% in the previous five years.

Whereas corporate focused banks such as ICICI Bank, Axis Bank, and SBI are facing serious asset quality issues. Not to mention, some of these banks had management issues as well. No wonder these banks not only underperformed retail-focused banks, but also the BSE Bank index as well.

But as I mentioned earlier, the worst is behind them.

We recommended a corporate bank in Smart Money Secrets.

Its aggressive clean-up of its corporate loan book, hiring the right people at the top, adoption of digital technology, and using algorithms in its core operations, bodes well for the bank and its stock. Smart Money Subscribers can access the report here.

If you do not have access to Smart Money Secrets, you can sign up here...

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

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Stock Market Updates

VAIBHAV GLOBAL Share Price Down by 5%; BSE 500 Index Down 1.0% (Today's Market)

Aug 14, 2020 03:34 PM

VAIBHAV GLOBAL share price is trading down by 5% and its current market price is Rs 1,843. The BSE 500 is down by 1.0%. The top gainers in the BSE 500 Index are LUPIN (up 9.2%) and HEIDELBERG CEMENT (up 8.4%). The top losers are VAIBHAV GLOBAL (down 5.1%) and EICHER MOTOR (down 7.2%).

TATA MOTORS Share Price Down by 5%; BSE AUTO Index Down 2.5% (Today's Market)

Aug 14, 2020 03:26 PM

TATA MOTORS share price is trading down by 5% and its current market price is Rs 133. The BSE AUTO is down by 2.5%. The top gainers in the BSE AUTO Index are CUMMINS INDIA (up 2.6%) and ASHOK LEYLAND (up 1.0%). The top losers are TATA MOTORS (down 5.2%) and EICHER MOTOR (down 7.2%).

VARROC ENGINEERING Share Price Down by 5%; BSE CAPITAL GOODS Index Down 0.5% (Today's Market)

Aug 14, 2020 03:26 PM

VARROC ENGINEERING share price is trading down by 5% and its current market price is Rs 231. The BSE CAPITAL GOODS is down by 0.5%. The top gainers in the BSE CAPITAL GOODS Index are NBCC (INDIA) LTD (up 3.1%) and SIEMENS (up 2.8%). The top losers is VARROC ENGINEERING (down 5.4%)..

BOSCH Share Price Down by 5%; BSE 500 Index Down 1.1% (Today's Market)

Aug 14, 2020 03:18 PM

BOSCH share price is trading down by 5% and its current market price is Rs 14,400. The BSE 500 is down by 1.1%. The top gainers in the BSE 500 Index are ECLERX SERVICES (up 9.6%) and LUPIN (up 9.2%). The top losers are BOSCH (down 5.2%) and EICHER MOTOR (down 6.9%).

BAJAJ ELECTRICALS at 52 Week High; BSE 500 Index Down 1.0 % (Today's Market)

Aug 14, 2020 03:06 PM

BAJAJ ELECTRICALS share price has hit a 52-week high. It is presently trading at Rs 470. BSE 500 Index is down by 1.0% at 14,874. Within the BSE 500, BAJAJ ELECTRICALS (up 7.0%) and REDINGTON (up 15.4%) are among the top gainers, while top losers are EICHER MOTOR and DISH TV.

Sensex Corrects Over 550 Points; Banking Stocks Under Pressure (Today's Market)

Aug 14, 2020 02:30 pm

Indian share markets slip into the red on signs of escalating US-China tensions.

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