Sensex Ends 38 Points Lower; Energy and Realty Stocks Witness Selling

Mon, 23 Dec Closing | Monish Vora, TM Team

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India share markets ended their volatile day marginally lower.

At the closing bell, the BSE Sensex stood lower by 38 points (down 0.1%) and the NSE Nifty stood down by 6 points (down 0.1%).

Both, the BSE Mid Cap index and the BSE Small Cap index, ended their day down by 0.1%.

Sectoral indices ended on a mixed note. Stocks in the energy sector, realty sector and FMCG sector witnessed huge selling pressure, while auto stocks were trading in the green.

The rupee was trading at 71.16 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.13% and the Shanghai Composite was down by 1.40%. The Nikkei 225 was up 0.02%.

European markets were also trading on a mixed note. The FTSE 100 was up by 0.14%. The DAX was trading down by 0.16%, while the CAC 40 was trading flat.

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In the news from the automobile sector, Union Minister Arjun Ram Meghwal today said his ministry has received 3-4 demands, including suggestion to cut GST rates, from automobile industry body SIAM and has forwarded them to the Finance Minister.

Addressing the 4th annual SIAM CSR Conclave here, the minister of state for heavy industries and public enterprises asked the auto industry for more suggestions, if any, before the finalisation of the Budget.

The Society of Indian Automobile Manufacturers (SIAM) is a not for profit apex national body representing all major vehicle and vehicular engine manufacturers in India.

How these suggestions are taken forward by the government remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Also, speaking of automobile sector, India's automobile industry is bracing itself for a unique challenge in the first quarter of 2020 when the transition of BS-IV to BS-VI emission norms has to be made at the stroke of midnight on 31 March 2020.

No BS-IV vehicle could be sold from 1 April 2020, which means automakers would have to reduce their inventory on BS-IV models to zero by then.

The exercise is likely to see companies show extra caution in dispatching cars to dealers in the next few months, which may cause a continuation of the decline in wholesale numbers.

However, despite the slowdown in the auto sector, the sales volume of electric vehicles (EVs) are growing at a robust pace.

Sale of Electric Vehicles in India Projected to Go Up 10x in the Next Two Decades

Electric vehicles are very much on their way to invading Indian roads. The threat of disruption in this era is something you cannot ignore.

The recently announced government incentives will give a further boost to EV sales.

The coming one year will be a real test for India's auto companies.

It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.

In our view, companies in the sector adapting their business models to the rapidly changing environment will survive and thrive.

Moving on to the news from the banking sector, Yes Bank share price was in focus today after reports suggested that European entities are showing interest in the beleaguered bank.

As per the news, it was reported that European entities are showing interest in the bank as the investors are looking to invest up to US$ 1 billion.

According to report, some entities which are showing interest in the bank have large exposure to Russia, while some investors own banks having exposure in Europe.

The stock of the lender was witnessing buying interest last week amid buzz that the private lender was likely to announce its much-awaited qualified institutional placement (QIP) soon.

Earlier last week, India Ratings and Research (Ind-Ra) had downgraded Yes Bank's Long-Term Issuer Rating from "A+" to "A", owing to inadequate and slow equity infusion. The fresh capital is critical for providing sufficient cushion for the credit cost impact of its stressed asset pool.

Ind-Ra considered equity infusion of US$ 1-1.2 billion in the next few weeks.

In a similar move, ICRA had also downgraded rating on Yes Bank's tier-II bonds from "A+" to "A". The downgrade was on the basis of continued uncertainty regarding the timing and extent of capital raise.

Note that the private bank on December 13 said the third quarter would remain subdued and there would be an improvement in the revenue in the March quarter on the back of government measures.

In a note, Yes Bank said that muted demand environment amid economic slowdown weighed on corporate earnings during the second quarter of 2019-20, with an aggregate revenue recording a contraction of 3.5% year-on-year (YoY) compared to an expansion of 3% in the preceding quarter of the financial year.

How the above developments pan out remains to be seen. Stay tuned for more updates from this space.

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

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