Indian Indices Continue Momentum; Sensex Ends 268 Points Higher
Closing

After opening the day marginally higher, Indian share markets continued their momentum and ended their day on a positive note. Sectoral indices ended on a mixed note with stocks in the telecom sector and energy sector witnessed maximum buying interest while capital goods stocks and auto stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 268 points (up 0.7%) and the NSE Nifty closed higher by 70 points (up 0.6%). The BSE Mid Cap index ended the day up by 0.5%, while the BSE Small Cap index ended the day up by 0.4%.

Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng was up 0.2% and the Nikkei was trading down by 0.1%. The Shanghai Composite stood lower by 0.2%.

The rupee was trading at 68.92 to the US$ at the time of writing.

In the news from the aviation space, Jet Airways share price witnessed selling pressure today amid massive cancellation of flights by the airline due to grounding of a large part of its fleet.

As per reports, Civil Aviation Minister Suresh Prabhu directed his ministry's secretary to hold an emergency meeting on Jet Airways massively cancelling flights after grounding of a large part of its fleet.

Shares of the company fell 5% on back of the above news.

The minister's direction came in the wake of the airline drastically reducing its operations due to liquidity crunch.

Note that reports had also suggested that the debt-laden airline could be staring at another default of US$ 109 million, which is to be paid by March 28 to the HSBC Bank Middle East as the second tranche of the US$ 140-million loan it had taken in 2014 and for which Etihad stood guarantor.

On March 11, Jet Airways defaulted on its external commercial borrowings (ECBs) of US$ 31 million, payable to HSBC and guaranteed by Etihad Airways.

An early resolution to the financial woes is crucial for crisis-hit Jet Airways as 61 of its 116 aircraft are currently grounded by lessors due to non-payment of lease rentals. It has also delayed salaries to pilots and interest payments on its debt.

Jet Airways had tried to lease or sell some of its owned aircraft to raise money that could help pare its over Rs 80 billion debt.

How this pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Moving on, Auto stocks remained under pressure for the second straight day on concerns of production cut due to slower demand.

TVS Motor company, Eicher Motors and Hero MotoCorp ended down in the range of 2-3% while Ashok Leyland, Bajaj Auto, Maruti Suzuki ended down by 1%.

Maruti Suzuki has fallen nearly 4% in the past two trading days over a report that the company cut production by a quarter over March last year.

As per an article in The Economic Times, Maruti is estimated to have cut production to around 126,000 units as compared to more than 172,000 units a year ago, which is a 26.8% reduction.

Here's an excerpt from the article:

  • A slowing demand in India's passenger vehicle market has prompted the car market leader, Maruti Suzuki India, to cut production by a quarter over March last year.

    Slowing demand and uncertainties ahead of the elections pushed the production level this month to its lowest since March 2015.

Reports state that CY19 is a challenging year for the automobile sector given slow demand trends, need for channel inventory correction, and most importantly, significant regulatory-led cost push.

The February retails reflect sustained weak volume trends across segments in February. Total vehicle retails were down 8% YoY whereas wholesales were down 4% YoY.

The domestic Commercial Vehicle (CV) industry is witnessing cycles within a cycle, led by regulatory changes, financing issues and the upcoming Lok Sabha election.

Also, speaking of the auto sector, India's auto sales slowed down in past few months due to weak consumer sentiment because of high interest rate, a spike in fuel price and insurance cost and liquidity crunch.

During H1 of FY18, the sector grew 11% in which CV & tractor segment expanding 34% and 13% while PVs grew by only 7%. On the other hand, higher rural participation has led the 2-wheeler & 3-wheeler segments to grew 36% and 10%.

It is interesting to note that one out of every three household in India is a buyer of their products. They own some of the cult brands in Indian automobile space.

They have formidable R&D teams. They have been through several economic cycles over decades. Few have even visited near-bankruptcy in the past and come out successful.

Yet, some of the biggest passenger car, commercial vehicle, and two-wheeler companies in India have seen a huge dent in valuations in recent times. This is evident in the chart below:

Bluechip Auto Are Stocks Way Off Their Valuation Peaks

Tanushree Banerjee, Co-head of Research at Equitymaster believes, this could be the opportunity long term investors were waiting for.

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


Sensex Trades Marginally Higher; ONGC & Bharti Airtel Top Gainers
12:30 pm

Share markets in India are presently trading marginally higher. Sectoral indices are trading mixed with stocks in the telecom sector and power sector witnessing buying interest while capital goods stocks and automobile stock are witnessing selling pressure.

The BSE Sensex is trading up by 72 points while the NSE Nifty is trading up by 19 points. The BSE Mid Cap index is trading up by 0.5% while the BSE Small Cap index is trading up by 0.4%.

The rupee is trading at Rs 68.59 against the US$.

In the news from the pharma sector, Dr. Reddy's share price is in focus today as the company has launched B2B customer service portal 'XCEED' to increase the operational efficiency.

Reportedly, the portal is focused on meeting the growing demand for the company's portfolio of generic active pharmaceutical ingredients (APIs).

The platform will be presented for the first time to customers in New York from March 18 to 21, 2019 and will be available to API customers across the globe during the next week.

Note that last month, shares of the company witnessed selling pressure on reports that the company's formulations manufacturing plant 3 at Bachupally, Hyderabad had been inspected by the US Food & Drug Administration (USFDA).

Reportedly, it was issued a Form 483 with 11 observations, out of which four are repeat observations. The observations are around lack of thorough investigations, written records lacking details, employees not being trained and lack of infra.

Shares of the company fell nearly 30% on back of the above news.

To know more about the company, you can read Dr Reddy's latest Result Analysis on our website.

In another news, Alembic Pharma has raised Rs 1.5 billion through Redeemable Non-Convertible Debentures (NCDs) of Rs 10 lakh per NCD under Tranche III.

The NCD Committee of the company at its meeting held on March 19, 2019 has allotted the same.

Dr Reddy's share price & Alembic Pharma share price are presently trading up by 1.6% & 0.4% respectively.

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.

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.

Moving on to the news from the global economy, Asian share markets are steady ahead of the US Federal Reserve policy meeting.

All three major US indexes rose overnight, lifted by banking and tech companies, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite adding between 0.3 and 0.4% each.

The pound slipped to as low as US$1.318 overnight as lawmakers cast doubt on Prime Minister Theresa May's third attempt to get parliament to back her Brexit deal.

Theresa May's Brexit plans were thrown into further turmoil on Monday when the speaker of parliament ruled that she could not put her divorce deal to a new vote unless it was re-submitted in fundamentally different form.

With signs of global economic growth slowing, investors will keep watch on the Federal Reserve, which is kicking off its two-day policy meeting later today, for clues about the likely path of US borrowing costs.

Reportedly, more detail on a plan to stop cutting the Fed's holdings of nearly US$3.8 trillion in bonds is also expected.

Speaking of Fed rate policy, how has the Fed rate hike impacted Indian stock markets in the past?

The past decade has seen Fed rates at historical lows, but it wasn't always the case.

The period from 2003-2006 saw Fed rates increase from 1% to 5.25%.

How did the Indian stock market fare during this time?

Do US Interest Rate Hikes Impact Indian Markets?

Well, if you are a long-term investor, you have nothing to worry about.

The Sensex went up by almost 3 times from 3,500 to more than 10,000 during the same period.

The rise was supported by strong earnings growth during the same period.

It further emphasizes the importance of fundamentals in the long run.

Look out for quality stocks with a history of strong earnings growth and sound fundamentals.

The noise surrounding the decisions of the US Fed might just present the right opportunity for you to buy safe stocks.

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


Sensex Opens in Green; Telecom and Energy Stocks Gain
09:30 am

Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.1% while the Hang Seng is down 0.1%. The Nikkei 225 is trading down by 0.3%. Banks and tech helped lead Wall Street higher on Monday, while Boeing and Facebook were a drag and investors eyed this week's US Federal Reserve meeting for affirmation of its commitment to "patient" monetary policy.

Back home, India share markets opened on a firm note. The BSE Sensex is trading up by 106 points while the NSE Nifty is trading up by 21 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.3% and 0.2% respectively.

Except capital goods stocks and automobile stocks, all sectoral indices have opened in green with oil & gas stocks and telecom stocks leading the pack of gainers.

Speaking of the broader markets, the current scenario in the Indian stock market looks very similar to what happened in 2013.

Back then, mid and small cap stocks witnessed a similar correction while the BSE Sensex stayed put.

2018-19 has also followed a similar pattern.

Long term-capital gains tax was introduced in last year's budget. We've seen corporate governance issues leading to auditor exits and finally the IL&FS impact.

The rally that followed in 2013 was led by mid and small caps.

Will 2019 pan out the same way?

Is It 2013 All Over Again?

As per research analyst, Sarvajeet Bodas, all you can do is control what can be controlled.

Pick up fundamentally strong stocks with an able management at the helm.

These are businesses that have delivered earnings even in tough times.

These stocks are most likely to lead the next leg of the market rally when it happens.

Moving on, the rupee is currently trading at Rs 68.59 against the US$.

The rupee on Monday continued its climb against the dollar as it appreciated past the 69-mark to close at an over seven-month-high of 68.53 to the greenback.

The gains in the domestic unit come at a time foreign portfolio investors (FPIs) continue to pour money into domestic equities.

So far this month, they have invested over US$3 billion in shares.

Apart from the FPI inflows, there have been other developments that have supported the currency.

Global central banks are in an accommodative mode which has helped emerging markets such as India.

Moreover, India's trade deficit for February at US$9.6 billion hit a 17-month low because of a contraction in imports.

At the same time, the equity markets have been on an up move amid expectations that the current government will come back to power with stable numbers.

At the inter-bank foreign exchange market, the rupee opened at 68.92 and rose to a high of 68.45 during the day. It settled at 68.53, a gain of 57 paise against the dollar over its previous close. This was the highest closing level for the rupee since 1 August 2018, when it had ended at 68.43.

Last Friday, the domestic unit had closed at 69.10 against the dollar and over the last six trading sessions, it has appreciated 161 paise.

The greenback's weakness vis-a-vis major global currencies also supported the sentiment in favour of the rupee. The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.2% to 96.40.

The rupee continues to remain firm despite the RBI's announcement of a US$5-billion-rupee swap arrangement last week under which it will buy dollars and pump in the rupee.

Though the move initially led to some weakness in the domestic currency, expectations of strong inflows, including the US$6 billion that ArcelorMittal will bring in for Essar Steel, boosted sentiments.

Further, market circles are also optimistic that FPIs will look at corporate bonds.

Moving on to another development. As per an article in a leading financial daily, Larsen & Toubro has bought a 20.3% stake in Mindtree for Rs 32.7 billion from early investor VG Siddhartha, after a lot of noise and the firing of a warning shot by promoters of the mid-tier IT services firm.

Reportedly, L&T will pay Rs 980 per share.

The deal, signed on Monday evening, gives the Cafe Coffee day founder a handsome exit from the company, which he first backed two decades ago.

It also provides Siddhartha with much-needed cash to retire the debt piled up in his flagship business.

Engineering giant L&T is expected to spend as much as Rs 74.6 billion to raise its stake to 66.3% in the IT services firm, which will remain an independent listed entity.

The deal includes an open offer to acquire 31% shares at Rs 50.3 billion and an advisory to its broker Axis Capital to buy as much as 15% shares from the open market to the tune of Rs 24.3 billion.

Mindtree's founders led by Natarajan have resisted the transaction fearing a loss of control over the company, which they claim has the potential to grow faster as more clients adopt technology to transform their business.

Natarajan had written to the L&T board on Saturday objecting to what he termed as the hostile takeover of the company, which could be detrimental to its investors, employees and customers.

The Mindtree board is due to meet on Wednesday to decide on a share buyback proposal, which now appears under threat after the closure of the deal between Siddhartha and L&T.

L&T share price and Mindtree share price opened down by 1.6% and 0.8% respectively.

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


Indian Indices Continue Uptrend, Jet Airways in Focus and Other Top Stocks in Action Today
Pre-Open

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

The BSE Sensex closed higher by points to end the day above the 38,000 point mark at 38,095. While the broader NSE Nifty ended the day up by 35 points to end at 11,462.

Among BSE sectoral indices, realty stocks rose the most by 2.5%, followed by energy stocks at 1.7%. Bajaj Finance and Power Grid Corp. were among the top gainers.

Top Stocks in Action Today

L&T share price is likely to be in focus as the company is likely to buy 20.4% stake held by Cafe Coffee Day (CCD) founder V.G. Siddhartha, followed by an open offer to buy an additional 31% stake in the company.

L&T has agreed to pay Rs 981 per share to buy the entire stake held by Siddhartha and two of his CCD firms.

Maruti Suzuki share price will be in focus today on reports of production cut due to slower demand.

As per an article in The Economic Times, Maruti is estimated to have cut production by 26.8% to about 126,000 units.

The Latest on the Jet Airways Saga

Jet Airways is in focus today company is set to delay payment on interest on bonds due on March 19.

The stock was also in focus as the company founder and Chairman Naresh Goyal's self-imposed deadline to announce an update on the resolution plan got over yesterday.

On March 1, Goyal had written to the airline's pilots, appealing for continued support and assured them that the senior management will provide an update on the resolution plan by March 18.

Lenders to the company have also told Jet's strategic partner Eithad Airways that if the company is unable to accept the terms of revive the airline, it should exit so that a new investor can be bought in.

Note that reports had also suggested that the debt-laden airline could be staring at another default of US$ 109 million, which is to be paid by March 28 to the HSBC Bank Middle East as the second tranche of the US$ 140-million loan it had taken in 2014 and for which Etihad stood guarantor.

On March 11, Jet Airways defaulted on its external commercial borrowings (ECBs) of US$ 31 million, payable to HSBC and guaranteed by Etihad Airways.

In a letter to HSBC on March 11, the domestic airline had said it is going through a severe liquidity crunch and is working on a bank-led resolution plan for its revival.

Selling pressure is also seen on reports that Etihad Airways is unlikely to agree with the provisional debt resolution plan proposed by the lenders.

As per an article in a leading financial daily, a meeting of the board of Etihad in Abu Dhabi last Tuesday remained inconclusive, with several members expressing reservations about the terms proposed by the lenders that included adding two nominee directors from the promoter group of Jet Airways, led by founder Naresh Goyal.

As per the provisional pact, a 'new investor' was to inject between Rs 16 billion to Rs 19 billion for about 20% in Jet Airways and the Goyal-led promoter group's stake was to fall to 17.1%. At present, Etihad holds 24% stake in Jet, while promoter Goyal and his family own a controlling 51% stake.

Etihad's board is expected to meet again to discuss the revised terms.

An early resolution to the financial woes is crucial for crisis-hit Jet Airways as 61 of its 116 aircraft are currently grounded by lessors due to non-payment of lease rentals. It has also delayed salaries to pilots and interest payments on its debt.

Jet Airways had tried to lease or sell some of its owned aircraft to raise money that could help pare its over Rs 80 billion debt. But the plans, including a wet leasing deal with TruJet for its ATRs, got stuck.

Aircraft lessors have been supportive of the company's efforts in this regard. The company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests.

How all this pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.