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Indian Indices Continue Momentum, Fed's Monetary Policy, and Top Cues in Focus Today
Thu, 20 Dec Pre-Open | Monish Vora, TM Team

Indian share markets continued their momentum throughout the day yesterday and ended on a strong note. Gains were largely seen in the realty sector, telecom sector and power sector.

At the closing bell yesterday, the BSE Sensex stood higher by 137 points (up 0.4%) and the NSE Nifty closed higher by 59 points (up 0.5%). The BSE Mid Cap index ended the day up 1.5% and the BSE Small Cap index, ended the day up by 1.1%.

Top Stocks in Focus Today

From the finance sector, shares of finance companies including banks, non-banking financial companies (NBFC), housing finance companies (HFCs) and microfinance institutions will be in focus today as the Reserve Bank of India (RBI) announced the plan to scale up liquidity infusion via purchase of government bonds.

Shares of Bajaj Finance, DHFL, Indiabulls housing finance, Bajaj Finserv were witnessing buying interest yesterday on the back of the above news.

From the pharma space, Glenmark Pharmaceuticals share price will also be in focus today as the company has forayed into the branded dermatology segment in the United States. The branded portfolio for the US market will be developed and commercialized by Glenmark Therapeutics Inc., USA, which is a wholly owned subsidiary of Glenmark Holding, SA.

This represents an important step in the company's long-term strategy to build a robust branded business in the US, alongside the company's existing and successful generics business.

To know more about the company, you can access to Glenmark Pharma's latest result analysis and Glenmark Pharma's Stock Analysis on our website.

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IDBI Bank Receives Offer for Additional Acquisition from LIC

IDBI Bank share price will also be in focus today as the lender has received final letter from Life Insurance Corporation (LIC) for an open offer to acquire additional 26% in the lender.

The open offer has been made at a price of Rs 61.73 a share, which is in connection with LIC's acquisition of 51% controlling stake in IDBI Bank.

Last month, the Competition Commission cleared LIC's proposed acquisition of up to 51% stake in debt-laden IDBI Bank.

Reportedly, the deal would help the insurance behemoth to enter the banking space and would provide business synergies despite the IDBI Bank's stressed balance sheet.

In August, the government gave its nod for the LIC's proposed purchase of up to 51% stake in the bank.

With the deal, the insurer would have access to around 2,000 branches of the bank through which it can sell its products.

However, at Equitymaster, we believe this attempt to bail out the troubled IDBI Bank is a classic case of the state insurer buying toxic assets.

Ask an average Indian investor about the next best thing after safe bank deposits. I can bet they would tell you about LIC policies.

For generations Indians have treasured LIC policies in their safe deposit lockers like their gold and fixed deposit receipts.

Therefore, Vivek Kaul, the Editor, Vivek Kaul's Diary, believes dumping IDBI Bank on to LIC, is definitely not an example of saaf niyat, as the country has been promised.

As he writes...

  • In simple English, the government is basically unloading its junkiest bank on the insurance behemoth, and hence, on the people of this country.

    As on March 31, 2018, the bank had Rs 55,000 crore worth of bad loans. Over and above this, it has stressed loans of Rs 60,000 crore, which means that the bad loans of the bank can keep going up in the months to come.

    There is a school of thought that says that LIC should be allowed into the banking sector. But on the basis of what? What expertise does LIC have in the core-banking area?

You can read Vivek's full insight in his article titled LIC Buying IDBI Bank is Not Saaf Niyat here.

Cues from Fed's Monetary Policy Decision

From the international financial markets, market participants will also be taking cues from the US Federal reserve's monetary policy decision.

Most of the participants are tracking Federal Reserve's dot plot and outlook for the American economy next year.

Speaking of Fed and interest rate, how does a US interest rate hike affect Indian investors?

The instant effect is foreign money moving out of India's vaults. This means a slight correction in the share market in India, albeit temporarily.

While this might provide a good buying opportunity in long-term stocks, the main thing to look forward would be capex and earnings trends.

In the end, Indian investors are better off staying informed about the corporate earnings revival than Fed rate hikes.

It is also worthwhile to note that the Indian stock market has done relatively well during the last period of rate hikes by the US Fed.

Take 2003-2006 for example...

Between 2003 and 2006, the US Fed rate moved from 1% to 5.25%.

Despite this, the Sensex rose from 3,500 levels to more than 10,000 during the same period. This increase was supported by strong earnings growth.

So, in the long term, rate hikes (triggered by economic growth) have proved good for the Indian markets.

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

Read the latest Market Commentary

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Stock Market Updates

INDIAN BANK Surges by 5%; BSE BANKEX Index Up 0.5% (Today's Market)

Aug 26, 2019 10:32 AM

INDIAN BANK share price has surged by 5% and its current market price is Rs 177. The BSE BANKEX is up by 0.5%. The top gainers in the BSE BANKEX Index is INDIAN BANK (up 5.4%). The top losers are FEDERAL BANK (down 0.2%) and CITY UNION BANK (down 0.8%).

INDIABULLS REAL EST Surges by 5%; BSE REALTY Index Up 0.2% (Today's Market)

Aug 26, 2019 10:26 AM

INDIABULLS REAL EST share price has surged by 5% and its current market price is Rs 71. The BSE REALTY is up by 0.2%. The top gainers in the BSE REALTY Index is INDIABULLS REAL EST (up 5.3%). The top losers are DLF (down 1.1%) and OBEROI REALTY (down 1.2%).

JSW STEEL Plunges by 5%; BSE METAL Index Down 4.5% (Today's Market)

Aug 26, 2019 10:16 AM

JSW STEEL share price has plunged by 5% and its current market price is Rs 224. The BSE METAL is down by 4.5%. The top gainers in the BSE METAL Index [TOPCOMPANY]. The top losers are JSW STEEL (down 5.2%) and TATA STEEL (down 6.1%).

The BSE METAL Index Down 4% ; VEDANTA LTD Among Top Losers (Today's Market)

Aug 26, 2019 10:10 AM

The BSE METAL Index Down at 8,622 (down 4.3%). Among the top losers in the BSE METAL Index today are VEDANTA LTD, TATA STEEL and JSW STEEL. Meanwhile, the BSE Sensex has plunged 0.4% to 37,364.

TATA STEEL Plunges by 5%; BSE METAL Index Down 4.2% (Today's Market)

Aug 26, 2019 10:08 AM

TATA STEEL share price has plunged by 5% and its current market price is Rs 348. The BSE METAL is down by 4.2%. The top gainers in the BSE METAL Index [TOPCOMPANY]. The top losers are TATA STEEL (down 5.0%) and VEDANTA LTD (down 5.0%).

Falling Rupee, July Domestic Air Passenger Traffic, and Top Cues in Focus Today (Today's Market)

Aug 26, 2019 Pre-Open

Top cues to track in today's stock market session.

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Aug 26, 2019 10:37 AM