Sensex Ends 140 Points Higher; Banking and Oil & Gas Stocks Witness Buying
Closing

Indian share markets ended their day on a positive note today ahead of counting of Lok Sabha Election 2019 to be done tomorrow.

Gains were largely seen in the banking sector, oil & gas sector, and capital goods sector.

At the closing bell, the BSE Sensex stood higher by 140 points (up 0.4%) and the NSE Nifty closed higher by 28 points (up 0.3%).

The BSE Mid Cap index ended down by 0.2%, while the BSE Small Cap index ended the day up by 0.5%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood up by 0.2% and the Nikkei was trading up by 0.1%, while the Shanghai Composite was trading down by 0.5%.

European markets were trading on a positive note. The FTSE 100 was up by 0.4%. The DAX was trading up by 0.3%, while the CAC 40 was up by 0.1%.

The rupee was trading at 69.69 to the US$ at the time of writing.

Speaking of Indian share markets, if the India Volatility Index (VIX) score is anything to go by, we are in for a turbulent ride ahead.

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The 4 Stocks to Buy If Modi Comes to Power Tomorrow...

The exit polls have clearly indicated who our next Prime Minister could be...

Causing an instant market rally of 1,400 points.

And tomorrow, when the election results are out, we'll know for sure.

But this isn't about profiting from short-term rallies - a BJP win could significantly boost the economy and the stock market in the long run as well.

Starting with these 4 stocks...which Richa Agarwal has recommended a strong BUY on.

You'll find the details here.
------------------------------

The VIX stood nearly at 4-year high today.

The India VIX Index measures the volatility expected over the next 30 days. It touched an all-time high this month.

Market Volatility Highest in Years

Market Volatility Highest in Years

Uncertainty over the general elections, trade war threats between US and China and rising crude oil prices have all contributed to widespread fear among investors.

While the 2018 correction was mainly due to corporate governance issues back home, the threat of macro issues looms large in 2019.

For you, dear reader, it is important to ignore the short-term noise of the mainstream media.

While the volatility index is high, it is no indicator of the market direction. The index was high during 2014 as well, prior to the elections. Post that we had a multi-year bull run.

Co-head of research at Equitymaster, Tanushree Banerjee believes, safe stocks with strong fundamentals will do well regardless the short-term volatility.

In fact, the volatility might just give you an opportunity to load up on these quality businesses.

Bajaj Electricals share price, Symphony share price, and IndusInd Bank share price were in focus in today's market session as these companies announced their Q4FY19 results today.

You can also read our recently released Q4FY19 Results: Bajaj Auto, PI Industries, GSK Pharma.

From the IT sector, market participants were tracking Tech Mahindra share price today as the company reported a 7.3% YoY drop in consolidated profit at Rs 11.3 billion for March quarter compared with Rs 12.2 billion in the same quarter last year.

Revenue for the quarter rose 10.4% YoY to Rs 88.9 billion, while operating income jumped to Rs 16.4 billion from Rs 14.1 billion on a yearly basis.

Commenting on earnings numbers, MD & CEO, CP Gurnani said the company had a satisfactory year, characterised by significant margin improvements, a growing digital portfolio and considerable increase in deal wins.

He added that while the company's enterprise business has performed satisfactorily during the year, the management is encouraged by the revival of the communications business.

The board of the company has recommended a dividend of Rs 14 per share on a face value of Rs 5. The dividend, if declared will be paid by August 8.

In the news from the pharma sector, Cipla share price was also in focus today as the company today said its consolidated net profit more than doubled to Rs 3,576 million in March quarter from Rs 1,531 million in the same quarter last year.

Consolidated sales for the quarter rose 22.2% year-on-year (YoY) to Rs 42.7 billion from Rs 34.9 billion in the same quarter last year.

In other news from the pharma space, Lupin share price was in focus today after the company announced the launch of its Budesonide Inhalation Suspension, 0.5 mg/2 mL Single-Dose Ampules in the US market.

The company had received an approval from the United States Food and Drug Administration (USFDA) earlier.

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 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.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.


Indian Indices Trade Marginally Higher; DHFL Down Over 9%
12:30 pm

Share markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the realty sector, capital goods sector and energy sector witnessing maximum buying interest, while FMCG stocks are trading in red.

The BSE Sensex is trading up by 109 points (up 0.3%), while the NSE Nifty is trading up by 17 points (up 0.1%).

The BSE Mid Cap index is trading down by 0.6%, while the BSE Small Cap index is trading up by 0.1%.

In the news from finance sector, DHFL share price is in focus today.

Shares of Dewan Housing Finance Corporation Limited (DHFL) witnessed selling pressure and plunged as much as 18% in morning trades today after the housing finance company said it has decided to temporarily stop taking fresh deposits and hold premature withdrawals from existing deposit schemes as it tries to manage its tight liquidity position.

The above move comes after the recent downgrade of the credit rating of DHFL's fixed deposit (FD) programme.

--- Advertisement ---
The 4 Stocks to Buy If Modi Comes to Power Tomorrow...

The exit polls have clearly indicated who our next Prime Minister could be...

Causing an instant market rally of 1,400 points.

And tomorrow, when the election results are out, we'll know for sure.

But this isn't about profiting from short-term rallies - a BJP win could significantly boost the economy and the stock market in the long run as well.

Starting with these 4 stocks...which Richa Agarwal has recommended a strong BUY on.

You'll find the details here.
------------------------------

DHFL, in a notice sent out to distributors and financial planners, said that in view of the recent revision in the credit rating of our fixed deposit program, acceptance of all fresh deposits, as well as renewals, has been put on hold with immediate effect. However, the company added, premature withdrawals would be allowed only in cases of medical or financial emergency if backed by proper documentation.

Note that DHFL's fixed deposit programme was downgraded by Brickwork Ratings India Ltd on Friday to BBB+ from AA- and had been put on credit watch with negative implications due to the limited build-up of liquidity. In its rating release, Brickwork Ratings pegged the size of DHFL's fixed deposit programme at Rs 120 billion.

In other news, as per a leading financial daily, the Employees' Provident Fund Organisation (EPFO) is planning to seek early re-payment of some of its investments from troubled firms in the sector, such as DHFL.

This comes on concerns regarding defaults and downgrades among NBFCs.

As per the news, the issue was discussed by the EPFO's Finance, Investment and Audit Committee (FIAC) at its meeting earlier this month.

A final decision on pulling back investments from select NBFCs, however, will be taken by the CBT, which is chaired by the Union Labour and Employment Minister, after the new government takes office.

The move also comes after the EPFO's difficulties with its investments in debt-ridden Infrastructure Leasing and Finance Company.

Data with the Standing Committee on Labour pegged the investment by the EPFO in IL&FS at Rs 5.7 billion.

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

Speaking of NBFCs, it is evident from the chart below that their credit growth has seen robust growth in recent years.

Is the NBFC Party in India Coming to an End?

Is the NBFC Party in India Coming to an End?

From 2013-2017, NBFCs grew by 13% as compared to 5.4% for banks. A major reason for this is the gain in market share from public sector banks (PSBs). The NPA woes of the PSBs has seen them tighten up their credit lines.

And the NBFCs stepped in, along with private sector banks, to fill this gap.

But the liquidity crisis at IL&FS has raised concerns over how long this growth will continue.

It would be interesting to see how this pans out.

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


Sensex Opens Marginally Higher; Realty and Energy Stocks Lead
09:30 am

Asian stock markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.2% while the Hang Seng is up 0.3%. The Shanghai Composite is trading on a flat note.

Back home, India share markets have opened the day on a positive note. The BSE Sensex is trading up by 84 points while the NSE Nifty is trading up by 16 points. The BSE Mid Cap index opened the day down by 0.6%, while the BSE Small Cap index opened down by 0.2%.

Sectoral indices are trading on a mixed note with stocks in the realty sector and energy sector witnessing buying interest while FMCG stocks and metal stocks are trading in red.

The rupee is trading at Rs 69.65 against the US$.

Speaking of Indian share markets, once the exit polls were released on Sunday, the markets reacted positively.

--- Advertisement ---
The 4 Stocks to Buy If Modi Comes to Power Tomorrow...

The exit polls have clearly indicated who our next Prime Minister could be...

Causing an instant market rally of 1,400 points.

And tomorrow, when the election results are out, we'll know for sure.

But this isn't about profiting from short-term rallies - a BJP win could significantly boost the economy and the stock market in the long run as well.

Starting with these 4 stocks...which Richa Agarwal has recommended a strong BUY on.

You'll find the details here.
------------------------------

The Sensex notched up gains of more than 1,400 points.

In the Long Run, Elections Don't Influence the Stock Market

In the Long Run, Elections Don't Influence the Stock Market

But there are two things that history has shown us.

One, is the exit polls should be taken with a pinch of salt. The 2004 elections are a classic case in point where the exit polls predicted a BJP win, while the actual counting resulted in Congress-led UPA gaining clear majority.

Second, near term reactions to elections aside, stock markets in the longer run have been influenced by the Indian economy and growth in corporate earnings.

Indeed, despite the Congress win in 2004 (something not factored in by the markets), the Sensex has been on a major bull run since then.

This, during years when both the UPA and the NDA have been in power.

Market participants are tracking Bank of Baroda share price, Symphony share price, and IndusInd Bank share price as these companies are set to announce their Q4FY19 results later today.

In the news from banking sector, as per a leading financial daily, the Reserve Bank of India (RBI) is said to be reviewing small finance banks' capital and holding structure and may come up with a pari-passu arrangement for all lenders.

Under previous governor Urjit Patel, RBI had directed these lenders to get listed within the deadline as specified in their bank licensing agreements. This meant closing down all other options such as reverse merger of banks and their holding companies.

The review of the norms may immediately benefit Equitas Small Finance Bank and Ujjivan Small Finance Bank. These banks are trying to abide by the listing rule by way of share-transfer schemes.

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

In other news, the RBI board yesterday sought to create a specialised oversight cadre while reviewing the current structure of supervision at the regulator.

A central bank statement said that with a view to strengthening the supervision and regulation of commercial banks, urban cooperative banks and Non-Banking Financial Companies (NBFCs), the Board decided to create a specialised supervisory and regulatory cadre within the RBI.

The need for the above additional oversight mechanism comes on the rise of the NBFC crisis, failures by credit rating agencies to flag risks, divergence in asset quality by big banks, and alleged lapses by auditors.

Moving on to the news from the aviation space, Jet Airways share price is in focus today. The Hinduja Group is reportedly considering a bid for the debt-laden airline, which has been grounded for more than a month.

Yesterday, shares of the company ended more than 14% higher on back of the above news.

An investment by the Hinduja group is expected to offer a respite to Jet Airways, its employees, as well as lenders and investors. The group is led by billionaire brothers Gopichand and Srichand Hinduja, who are among the UK's wealthiest people.

The bidding process will start this week, having obtained the approval of key stakeholders including founder Naresh Goyal and Etihad airways.

The airline's total liability, including unpaid salaries and vendor dues, is around Rs 150 billion. Several flights have been suspended since April because of a severe cash crunch.

A senior SBI official said that the lenders are likely to meet representatives of the Hinduja Group next week as the announcement of general election results on Thursday and subsequent formation of a new government at the centre would keep the lenders busy this week.

So far, Etihad is the only party to have placed a bid. Its bid is also non-binding and subject to fulfilment of certain conditions by the lenders. Etihad, which holds a 24% stake in Jet Airways, has agreed to infuse up to Rs 14 billion into the carrier.

Also, the cash-strapped airline has seen a slew of top executives and board members leave the airline in the past few months. Last month, Nasim Zaidi quit his position as non-executive and non-independent director on the airline's board citing 'personal reasons' and 'time constraints'.

The airline's independent director, Rajshree Pathy also quit the board in April. Last week, top executive Gaurang Shetty, considered close to founder Naresh Goyal, also resigned from airline's board of directors.

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

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


Rising Oil Prices, Latest on the Jet Airways Saga, and Top Stocks in Action Today
Pre-Open

On Tuesday, share markets in India fell sharply in the afternoon session and ended deep in the red after a volatile day of trading.

The BSE Sensex closed lower by 383 points to end the day at 38,970. Tata Motors and Maruti Suzuki were among the top losers.

While the broader NSE Nifty ended down by 119 points to end at 11,709.

Among BSE sectoral indices, auto stocks fell the most by 2.6%, followed by metal stocks and IT stocks.

Top Stocks in Action Today

JSW Steel share price will be in focus today as the company is planning to raise long term funds through issuance of non-convertible debentures with warrants which are convertible into or exchangeable with equity shares of the company.

State Bank of India (SBI) share price will also be in focus as the lender has reportedly entered into strategic partnership with the FMCG arm of The Art of Living - Sri Sri Tattva.

Market participants will also track IndusInd bank share price, Symphony share price and Thermax share price as these companies will announce their March quarter (Q4FY19) results today.

You can also read our recently released Q4FY19 Results: Bajaj Auto, PI Industries, GSK Pharma.

--- Advertisement ---
The 4 Stocks to Buy If Modi Comes to Power Tomorrow...

The exit polls have clearly indicated who our next Prime Minister could be...

Causing an instant market rally of 1,400 points.

And tomorrow, when the election results are out, we'll know for sure.

But this isn't about profiting from short-term rallies - a BJP win could significantly boost the economy and the stock market in the long run as well.

Starting with these 4 stocks...which Richa Agarwal has recommended a strong BUY on.

You'll find the details here.
------------------------------

Results Corner

Bodal Chemicals share price has reported a fall of 25.3% in its net profit at Rs 296.4 million for March quarter (Q4FY19) as compared to Rs 396.8 million for the same quarter in the previous year.

However, total income of the company increased by 15.2% at Rs 3287.7 million for Q4FY19 as compared Rs 2854.9 million for the corresponding quarter previous year.

Bosch share price has reported a fall of 5.1% in its net profit at Rs 4117 million for the quarter ended March 31, 2019 as compared to Rs 4337.8 million for the same quarter in the previous year.

United Breweries share price has reported a fall of 25.3% in its net profit at Rs 679.2 million for the quarter ended March 31, 2019 as compared to Rs 908.8 million for the same quarter in the previous year.

BPCL share price has reported a rise of 16.2% in its net profit at Rs 31.2 billion for the quarter under review as compared to Rs 26.9 billion for the same quarter in the previous year.

Total income of the company increased by 10.5% at Rs 850 billion for Q4FY19 as compared Rs 769.1 billion for the corresponding quarter previous year.

From the Aviation Space...

On Tuesday, Hinduja Group said that it is evaluating a possible bid for debt-laden Jet Airways. Reportedly, Hinduja Group is in talks with Jet founder Naresh Goyal and investor Etihad, besides talking to investment bankers led by SBI Capital Markets for due diligence.

Shares of the company ended 12.7% higher yesterday on back of the above news.

Jet has tried to convince investors for months including Etihad, to pump in money and save the airline. Etihad, which already holds a minority stake in Jet, is interested in re-investing in the airline, subject to certain conditions.

The debt-laden airline has seen a slew of top executives and board members leave the airline in the past few months. Last month, Nasim Zaidi quit his position as non-executive and non-independent director on the airline's board citing 'personal reasons' and 'time constraints'.

The airline's independent director, Rajshree Pathy also quit the board in April. Last week, top executive Gaurang Shetty, considered close to founder Naresh Goyal, also resigned from airline's board of directors.

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

From the IPO Space...

The country's largest Agri-centric commodity derivative exchange, the National Commodity & Derivatives Exchange Limited (NCDEX), is working on a plan to float an Initial Public Offering (IPO) to provide an exit option to some shareholders who have stayed invested since long and raise growth capital.

The National Stock Exchange (NSE) is the largest shareholder with 15% equity holding. Reportedly, the exchange has already initiated talks with two merchant bankers.

Speaking of IPOs, we at Equitymaster believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

Oil Prices

Oil prices rose on Tuesday on escalating US-Iran tensions and amid expectations that producer club OPEC will continue to withhold supply this year.

On Monday, US President Donald Trump threatened Iran with "great force" if it attacked US interests in the Middle East. This came after a rocket attack in Iraq's capital Baghdad, which Washington suspects to have been organized by militia with ties to Iran.

The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been withholding supply since the start of the year to prop up prices.

A meeting has been scheduled for June 25-26 to discuss the policy.

Stay tuned for more updates!