Sensex Ends Marginally Higher; Telecom & Banking Stocks Witness Buying
Closing

Indian share markets witnessed buying interest during closing hours and ended on a positive note. Gains were seen in the telecom sector, banking sector and healthcare sector, while power stocks and realty stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 131 points (up 0.4%) and the NSE Nifty closed higher by 30 points (up 0.3%). The BSE Mid Cap index ended the day down 0.2% and the BSE Small Cap index ended the day up by 0.2%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 0.2% and the Shanghai Composite was down by 0.3%. The Nikkei 225 was up 0.8%.

The rupee was trading at 70.11 against the US$.

The rupee weakened by 36 paise to 70.04 against the US dollar in opening trade today on rising crude prices and some demand for the American currency from importers.

On Monday, the rupee had gained 4 paise to end at 69.68 against the US dollar following dovish stance by the Federal Reserve.

Market participants awaited the outcome of the US-China trade talks and President Donald Trump's speech.

So far this year, the rupee has declined 1.3%, while foreign investors have sold US$203.80 million in equities and bought US$43.50 million in the debt markets.

In the news from the automobiles sector, Tata Motors share price was in focus today as the company's wholly owned subsidiary - Jaguar Land Rover (JLR) has reported 16.2% rise in its sales in India at 4,596 units in 2018. The company had sold 3,954 units in 2017.

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Last week, the company posted strong growth in US JLR sales.

The total JLR US sales rose 24% at 14,079 units against 11,394 units last year.

The total land rover US sales have risen 33% at 10,617 units against 7,980 units last year and the total Jaguar US sales rose 1.4% at 3,462 units against 3,414 units in December 2017.

Tata Motors share price ended the day up by 2.7%.

To know more about the company, you can access to Tata Motors Q2FY19 result analysis and Tata Motors stock analysis on our website.

Moving on to the news from the banking sector, shares of Gruh Finance and Bandhan bank witnessed selling pressure today amid merger reports.

On Monday, Bandhan bank said that Gruh finance will merge with it in an all-share deal valued at approximately Rs 818 billion based on the closing prices of shares of the two players.

As per an article in the Economic Times, shareholders of Gruh will get 568 shares of Bandhan for every 1,000 shares held.

Here's an excerpt from the article:

  • The amalgamation will result in enhancement of shareholder value accruing from synergy of operations, new products development, integration of technology and information.

The transaction helps lower the promoter stake in Bandhan Bank to 61% from 82%. This means the outstanding number of shares of Bandhan Bank will go up to close to 1.6 billion shares post the merger.

Moreover, the merger will see HDFC Limited owning close to 15% in Bandhan Bank via its holding in Gruh Finance.

Further, the micro credit or unsecured portfolio of Bandhan bank will fall from the current levels of 86% to 58%, thanks to the presence of secured home loans in the combined portfolio.

Note that, the swap ratio was slightly in favor of Bandhan Bank. RBI's banking license rules require the promoters of Bandhan Bank, Bandhan Financial Holdings to lower its stake from 82.3% to 40% within three years of starting a business.

The central bank had penalized the lender for failing to comply with the guidelines within the stipulated timeline by freezing branch expansion and remuneration of founder and chief executive.

Reportedly, the share swap ratio set for the Bandhan-Gruh Finance merger ensures HDFC has got itself a sweet deal.

As per Tanushree Banerjee, Co-head of Research at Equitymaster, mergers and acquisitions are typically evaluated based on the synergies of the businesses and valuations offered.

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

  • Turns out Bandhan Bank's acquisition of Gruh Finance is a winner on all counts. Not that the bank has struck a bargain in the share swap ratio. Rather Gruh Finance has been richly valued. But Gruh Finance could help Bandhan become more than a bigger bank.

    Although HDFC (parent of Gruh Finance) is not directly involved in the deal, it is evident that both HDFC and Bandhan Bank want a bigger share of the rural pie. The exponential growth that rural banking has witnessed over past few years offers huge scope. Especially, for entities with proven credit appraisal history.
The Potential that HDFC and Bandhan Bank Tapped Into...

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


Sensex Trades Rangebound; Telecom & Healthcare Stocks Gain
12:30 pm

Share markets in India are presently trading on a flat note. Sectoral indices are trading mixed with stocks in the power sector, capital goods sector and oil & gas sector witnessing maximum selling pressure while healthcare stocks and telecom stocks are witnessing buying interest.

The BSE Sensex is trading up by 15 points while the NSE Nifty is trading down by 5 points. The BSE Mid Cap index is trading down by 0.2% and the BSE Small Cap index is trading on a flat note.

The rupee is trading at Rs 69.98 against the US$.

In the news from the commodity space, oil prices remained stable supported by hopes that talks under way in Beijing involving US and Chinese officials could end trade disputes between the world's biggest economies, while OPEC-led supply cuts also tightened markets.

Reportedly, there is also concern that a worldwide economic slowdown will dent fuel consumption, resulting in a reduction of bullish positions the hedge fund industry holds in crude futures.

Looking at oil supplies, 2019 crude prices have been supported by supply cuts from a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

Crude oil prices, however, are on a decline over the last few weeks over concerns of a supply glut.

OPEC oil supply fell by 460,000 barrels per day (bpd) between November and December, to 32.7 million bpd, as top exporter Saudi Arabia made an early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.

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

Moving on to the news from the pharma space, Lupin share price is in focus today as the European Commission (EC) has approved NaMuscla (mexiletine) for the symptomatic treatment of myotonia in adults with nondystrophic myotonic (NOM) disorders.

Non-dystrophic myotonic disorders are a group of rare, inherited neuromuscular disorders which cause the inability to relax muscles following voluntary contraction. NaMuscla reduces myotonia symptoms in adult patients, resulting in a significant improvement in patient quality-of-life and other functional outcomes.

The drug major has also received approval from the United States Food and Drug Administration (USFDA) for Lurasidone Hydrochloride Tablets, 20 mg, 40 mg, 60 mg, 80 mg & 120 mg to market a generic version of Sunovion Pharmaceuticals, Inc's Latuda Tablets, 20 mg, 40 mg, 60 mg, 80 mg, and 120 mg.

To know more about the company, you can read Lupin Q2FY19 result analysis and Lupin annual report on our website.

In another news, Thirumalai chemicals share price is also in focus today as the company received approval from its board for formation of a Wholly Owned Subsidiary (WOS) in the Netherlands for marketing and distribution of the company's products in Europe and other countries.

Speaking of pharma sector, note that the BSE Healthcare Index has been on a roller coaster ride in the past few years. The period from 2012 to 2015 saw the index go up more than three times.

And since then it has been a painful ride downwards, as can be seen from the chart below:

The Roller Coaster Ride of the BSE Healthcare Index

As we wrote in one of our editions of The 5 Minute WrapUp...

  • Pre-2015, pharma companies enjoyed a fairytale ride in the US market. Low labor costs, good chemistry skills, along with efficiency, ensured Indian companies could copy innovator drugs to make generic drugs at a fast pace.

    The generic business had lucrative margins for all major pharma players. But the party did not last long. In the quest to supply drugs quickly, they compromised on quality at their manufacturing facilities.

    No wonder, the US regulatory authority (USFDA) took strict action. Sun Pharma received a warning letter for its Halol manufacturing facility in 2015. It was like a bolt out of the blue. Since then, the downward spiral began and has continued till date.

We believe that pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market as well as in the overall industry.


Sensex Opens Flat; Bandhan Bank & Gruh Finance Plummet after Merger Deal
09:30 am

Asian stock markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.8% while the Hang Seng is up 0.2%. The Shanghai Composite is trading down by 0.3%. Meanwhile, US stocks rose in choppy trading on Monday as investors bet on US-China talks on trade.

Back home, India share markets opened flat with a negative bias. The BSE Sensex is trading down by 17 points while the NSE Nifty is trading down by 16 points. The BSE Mid Cap index opened up by 0.1% while BSE Small Cap index opened down by 0.1%.

Sectoral indices have opened the day on a mixed note with realty stocks and healthcare stocks witnessing maximum buying interest. While, power stocks and energy stocks have opened the day in red.

The rupee is currently trading at Rs 70.08 against the US$.

The Indian rupee was trading lower against the US dollar in the early trade today after crude oil prices surged in eight out of nine trading sessions.

Market participants awaited the outcome of the US-China trade talks and President Donald Trump's speech.

In the early trade, the rupee was trading at 70 a dollar, down 0.5% from previous close of 69.68. The home currency opened at 69.84 a dollar and touched a low of 70.01 a dollar.

Brent crude jumped eight out of nine trading sessions and rose over 14% in this period on optimism that the US and China may reach a trade deal and American crude inventories may fall.

US expressed optimism it can reach a reasonable trade deal with China as President Xi Jinping dispatched one of his top aides to the negotiations in Beijing.

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Traders will also be monitoring Trump's televised address today to see what he says about the government shutdown before he travels to the US-Mexico border later in the week.

So far this year, the rupee has declined 1.3%, while foreign investors have sold US$203.80 million in equities and bought US$43.50 million in the debt markets.

The dollar index, which measures the US currency's strength against major currencies, was trading at 95.827, down 0.2% from its previous close of 95.666.

Moving on to the news from banking sector. In the latest development, Bandhan Bank said on Monday Gruh Finance would merge with it in an all-share deal valued at approximately Rs 818 billion based on the closing prices of shares of the two players.

Reportedly, shareholders of Gruh will get 568 shares of Bandhan for every 1,000 shares held.

The transaction helps lower the promoter stake in Bandhan Bank to 61% from 82%. This means the outstanding number of shares of Bandhan Bank will go up to close to 1.6 billion shares post the merger.

Moreover, the merger will see HDFC Limited owning close to 15% in Bandhan Bank via its holding in Gruh Finance.

Further, the micro credit or unsecured portfolio of bandhan bank will fall from the current levels of 86% to 58%, thanks to the presence of secured home loans in the combined portfolio. Also, the average tenure of the loans will also go up since Gruh loans tend to have tenure of three years whereas we give loans of one-year.

Note that, the swap ratio was slightly in favour of Bandhan Bank. RBI's banking licence rules require the promoters of Bandhan Bank, Bandhan Financial Holdings to lower its stake from 82.3% to 40% within three years of starting a business.

The central bank had penalised the lender for failing to comply with the guidelines within the stipulated timeline by freezing branch expansion and remuneration of founder and chief executive.

Reportedly, the share swap ratio set for the Bandhan-Gruh Finance merger ensures HDFC has got itself a sweet deal.

Note that, the HDFC Group stocks have been such phenomenal wealth-creators that no investor wants to miss any opportunity to pick up a stock with the HDFC brand tag.

The chart below shows the number of times you could have multiplied your wealth by being an early investor in any HDFC Group company.

The HDFC Group of Multibaggers...

Bandhan Bank share price opened the day down by 4.9%, while Gruh finance share price fell over 13% in the opening session.

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


Sensex Ends Day in Green, Bandhan Bank Merger, and Top Stocks in Action
Pre-Open

On Monday, share markets in India opened on a positive note and ended the day in green after an optimistic day of trading.

The BSE Sensex closed higher by 155 points to end the day at 35,850. While the broader NSE Nifty ended the up by 49 points to end at 10,777.

Among BSE sectoral indices, realty stocks rose the most by 1.5%, followed by telecom stocks at 1.2%. Axis Bank and Tata Motors were among the top gainers.

Top Stocks in Action Today

Bharat Heavy Electricals Limited (BHEL) share price is likely to be in focus today after the state run company commissioned an 800 MW thermal power unit within a record time of 46 months for Kothagudem Thermal Power Station of Telangana State Power Generation Corporation.

Bharat Forge share price is likely to be in focus today after the domestic automobile company reported disappointing sales numbers during the month of December 2018 because of adverse macroeconomic conditions.

The company has recently received the first export order for its aluminum light weighting business and the company's oil & gas segment is at its all-time high.

Bandhan Bank and Gruh Finance share price are likely to be in focus today after reports that the bank and HDFC-controlled Gruh Finance, an affordable home loans subsidiary, are set to unveil a $12-billion share-swap merger.

The merger would result in Bandhan founder Chandra Shekhar Ghosh bringing down his promoter holding to just above 60%

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Radhika and Sarvajeet, co-editors of Smart Money Secrets track over 40 of India's most successful investors, bringing the best of their stock picks to their subscribers…

And they've identified 13 potentially profitable stocks that you could consider adding to your portfolio right now!

Click here for full details on Sarvajeet and Radhika's stock picking strategy – and to get access to these 13 stocks.
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IL&FS Woes Worsen

As per an article in a leading financial daily, IL&FS Transportation Networks, a group company of the troubled IL&FS group, defaulted on dividend payment of Rs 71.2 million due on redemption of cumulative non-convertible redeemable preference shares.

Reportedly, the dividend of Rs 71.2 million was due for the period between 1 April 2017 to 23 December 2018 and was not paid due to insufficient funds.

Note that, IL&FS and its subsidiaries have defaulted on many debt instruments in the past few months due to insufficient funds.

The group's total debt stood at over Rs 940 billion as of October 2018.

Speaking of the IL&FS crisis, Tanushree Banerjee, co-head of Research at Equitymaster, rightly pointed out in The 5 Minute WrapUp, that rating agencies were late to ring the alarm bells this time as well.

Here's what Tanushree wrote:

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