Will Banks Pass on Benefits of RBI's Rate Cut?
Podcast

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) announced a 25 basis points cut in repo rate in its second bimonthly policy review of this financial year.

After the cut, the repo rate now stands at 5.75% - the lowest since July 2010.

Market participants and economists see a rate cut crucial at this point in time as the economy has been witnessing signs of slowdown.

The rate cut by the RBI means a drop in the cost of funds for individual and corporate borrowers.

However, banks have not been very efficient is passing on the benefits of the recent rate cuts to their customers.

On the contrary, a number of banks have raised their deposit rates to mobilise funds

Will the latest rate cut spur on banks to pass on the benefits to individual and corporate borrowers?

Tune in to find out...


Sensex Ends 86 Points Higher; Telecom and Banking Stocks Witness Buying
Closing

Indian share markets ended their volatile day on a positive note today.

Gains were seen in the telecom sector, banking sector and consumer durables sector, while stocks from the power sector witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 86 points (up 0.2%) and the NSE Nifty closed higher by 26 points (up 0.2%).

The BSE Mid Cap index ended down by 0.2%, while the BSE Small Cap index ended the day down by 0.1%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood up by 0.26% and the Nikkei was trading up by 0.53%, while the Shanghai Composite was trading down by 1.2%.

European markets were trading on a positive note. The FTSE 100 was up by 0.7%. The DAX was trading up by 0.8%, while the CAC 40 was up by 1.4%.

The rupee was trading at 69.47 to the US$ at the time of writing.

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FACT: India Was Destined To Prosper Regardless of Whether Modi Won Or Not…

The question on the minds of a lot of our readers until a few days ago was – "Who's going to come to power this time? And will India's growth, and more importantly my gains, be affected by who wins the election?"

Well, in the short term, may be.

But the fact of the matter was – in the long term, we have always believed India was destined for a potential MASSIVE upsurge regardless of whether Modi won or not.

Yes! It's all thanks to the once-in-2000 years economic phenomenon we call the Rebirth of India that could transform our country from developing to developed, take the Sensex past 100,000 and potentially making regular investors a LOT of money.

In fact, the Rebirth of India is actually MUCH bigger than the opening up the economy in 1991 too.

And Modi's re-election could actually act as a catalyst and help accelerate the entire thing.

That's why our Co-Head of Research, Tanushree Banerjee, has identified 7 specific stocks that she believes are potentially best placed to benefit from this coming surge.

But these stocks may not remain in the BUY range for long.

So hurry, just click here for full details now...
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In the news from the commodity space, crude oil was witnessing buying interest today. Crude oil prices climbed around 1% yesterday and continued their momentum today on the back of a report that Washington could postpone trade tariffs on Mexico.

Also, signs that the Organization of the Petroleum Exporting Countries (OPEC) and other producers may extend crude supply cuts helped crude oil trade on a positive note.

In the coming days, members of the OPEC+ group are set to discuss whether to extend their supply curbs further.

President Vladimir Putin said that Russia had differences with OPEC over what constituted a fair price for oil. However, he said, Moscow would take a joint decision with OPEC colleagues on output at a policy meeting in the coming weeks.

Note that within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018.

That has made the United States the world's biggest producer ahead of Russia and Saudi Arabia.

Also, crude oil prices have quietly creeped up this year.

Oil prices have jumped as much as 3.2% to their highest level since late 2018.

As you know, rising crude oil prices have a big impact on the Indian economy as it imports over 70% of its energy needs.

Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening.

Research Analyst, Richa Agarwal believes that this has the potential to bring down sentiments in the domestic markets. She further believes that, if oil prices continue their upward march in a tight global environment, a broader correction in the sentiment fueled domestic market cannot be ruled out.

Speaking of crude oil, Vijay Bhambwani, editor of Weekly Cash Alerts, called the US President Donald Trump's bluff on crude oil in one of his recent articles. Here's an excerpt of what he wrote...

  • From 2018 US is the largest oil producing country in the world with 13.4% of the global oil output daily.

    The USA has jumped ahead of Saudi Arabia and Russia in oil output. My question to every oil trader out there is this - as long as the USA was an importer, it made sense to push for lower oil prices. There were tangible benefits in doing so.

    President Donald Trump runs the world's largest debtor nation. One that is gasping for export income and a strong dollar. A firm USD ensures easier servicing and repayment of debt and vice versa. So now that Trump wants to export oil, and earn petro dollars does it benefit him if oil prices were to go up or down? So why does he tweet for lower oil prices?

To know more, you can read Vijay's entire article here: Crude Oil - What 'Trump Nation' Really Wants

Dewan Housing Finance Corporation (DHFL) share price was in focus today. The stock of the company witnessed selling pressure and went on to touch its fresh 52-week low in today's session. This was the third consecutive session the stock has been witnessing selling.

Yesterday, the stock plunged around 16% after rating agencies Crisil, CARE and ICRA downgraded commercial papers (CP) issued by DHFL to default or 'D' category. The move came after the company missed an interest payment on its non-convertible debentures (NCDs).

In response, DHFL said that the action by the rating agencies was extremely surprising as the company has been making & continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations.

Since September 2018, the company has repaid close to Rs 400 billion of obligations and also sold its strategic retail assets.

Note that DHFL is also facing questions about its financial health after the IL&FS default pushed up the cost of funds for the mortgage lender and made borrowing difficult.

Speaking of non-banking financial companies (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 recent NPA woes of the PSBs has seen them tighten up their credit lines.

The NBFCs have stepped in, along with private sector banks, to fill this gap. But the recent liquidity crisis at IL&FS has raised concerns over how long this growth will continue.

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

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


Sensex Trades Marginally Lower; Reliance Industries & Yes Bank Top Losers
12:30 pm

Share markets in India are presently trading on a negative note. Sectoral indices are trading mixed with stocks in the energy sector and healthcare sector witnessing selling pressure while telecom stocks and consumer durable stocks are trading in green.

The BSE Sensex is trading down by 56 points (down 0.1%), while the NSE Nifty is trading down by 10 points (down 0.1%). The BSE Mid Cap index and the BSE Small Cap index are trading on a flat note.

The rupee is currently trading at Rs 69.35 against the US$.

Speaking of Indian stock markets, note that the Sensex, BSE Midcap index and BSE Smallcap index have had differing degrees of volatility over past fifteen years.

But the returns from the three different indices are mostly in line since 2004. Rs 100 invested in any of these indices in 2004 would have yielded about Rs 700 by March 2019.

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FACT: India Was Destined To Prosper Regardless of Whether Modi Won Or Not…

The question on the minds of a lot of our readers until a few days ago was – "Who's going to come to power this time? And will India's growth, and more importantly my gains, be affected by who wins the election?"

Well, in the short term, may be.

But the fact of the matter was – in the long term, we have always believed India was destined for a potential MASSIVE upsurge regardless of whether Modi won or not.

Yes! It's all thanks to the once-in-2000 years economic phenomenon we call the Rebirth of India that could transform our country from developing to developed, take the Sensex past 100,000 and potentially making regular investors a LOT of money.

In fact, the Rebirth of India is actually MUCH bigger than the opening up the economy in 1991 too.

And Modi's re-election could actually act as a catalyst and help accelerate the entire thing.

That's why our Co-Head of Research, Tanushree Banerjee, has identified 7 specific stocks that she believes are potentially best placed to benefit from this coming surge.

But these stocks may not remain in the BUY range for long.

So hurry, just click here for full details now...
------------------------------

In fact, as we can see in the chart below, the gap in the compounded annual return of the Sensex and Smallcap index is less than 1%.

Difference in 15-year CAGR of Sensex and BSE Smallcap Index is Less than 1%

Difference in 15-year CAGR of Sensex and BSE Smallcap Index is Less than 1%

This shows that while small caps are a good place to look for big returns, blue chips can also offer you big returns over long time frames.

In fact, as per Tanushree, the best contrarian bets on such safe stocks could even offer you handsome three digit returns.

Indiabulls Real Estate share price is witnessing buying interest today after the promoters sold 14% of their holding in the company through open market. Data showed that 61.3 million shares changed hands on the BSE in a single transaction.

The company in a regulatory filing said, 'in line with company's promoters' strategy to focus on financial services in the long run, the promoters intend to dispose-of up to 14% of the fully paid-up share capital of the company to third party investors'.

President of Indiabulls Group, Ajay Mittal added that the chief reason behind exiting real estate business was to fast track the Lakshmi Vilas Bank merger.

Reports state that, Blackstone Group and Bengaluru-based property developer Embassy Group are set to jointly acquire the promoters' stake at an estimated enterprise value of around US$ 1 billion.

Earlier, news reports suggested the Blackstone-Embassy Group JV was set to acquire the entire 39% stake of Indiabulls Group chairman Sameer Gehlaut in the company.

Indiabulls Real Estate has been selling its commercial assets to Blackstone. In December 2018, it sold 50% stake in two office assets in Gurgaon to Blackstone at an enterprise value of Rs 4.6 billion.

The company also sold 50% stake in its two prime commercial assets in Mumbai to Blackstone for an enterprise value of Rs 95 billion.

Moving on to the news from the steel sector, JSW Steel has agreed to acquire 10,000 shares of Piombino Steel from JSW Techno Projects Management.

Further, Piombino Steel shall acquire 8,000 shares, comprising the entire issued and paid-up share capital of Makler from JSW Techno Projects Management.

After this transaction, Piombino Steel will become a wholly owned subsidiary of the company and Makler will become a wholly owned subsidiary of Piombino Steel.

In other news, the company is also weighing options for British Steel Ltd. A team from JSW Steel has reportedly started looking at the company and its prospects.

British Steel, which produces products used in construction and rail networks, went into administration last month following the collapse of talks between Greybull Capital, the private equity owner of British Steel, and the UK government for a £30-million loan.

Reports state that, British Steel has 3 million tonnes of steel-making capacity in Sculthorpe, UK, and rolling mills specializing in rail, construction steel, special steel and wire rod across the UK, France and the Netherlands.

Speaking of acquisitions, JSW Steel has made a series of acquisitions in the past year. In May 2018, it bought Italy's second largest steel plant Aferpi for Rs 6 billion and in June, it committed Rs 34 billion to acquire and upgrade US-based integrated steel plant Acero Junction.

JSW also acquired Monnet Ispat through the insolvency courts for Rs 28.8 billion in a consortium with AION Investments. The company's bid of Rs 197 billion for Bhushan Power and Steel is awaiting court approval.

JSW Steel share price is presently trading up by 0.5%.

To know more about the company, you can read JSW Steel's latest result analysis on our website.


Sensex Opens Flat; Banking and Realty Stocks Gain
09:30 am

Asian share markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.5% and the Hang Seng rose 0.2%. The Shanghai Composite lost 1.2%. Wall Street's main indices closed higher after a choppy session on Thursday as investors grew more optimistic on trade after reports that the United States is considering a delay in imposing tariffs on Mexican imports.

Back home, India share markets opened on a flat note. The BSE Sensex is trading up by 36 points while the NSE Nifty is trading down by 4 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.1% and 0.2% respectively.

Sectoral indices have opened the day on a mixed note with realty stocks and bank stocks leading the gainers. Oil & gas stocks and telecom stocks have opened the day in red.

The rupee is currently trading at 69.19 against the US$.

On Thursday, the Indian rupee recouped most of its early losses and closed marginally lower at 69.28 to the US dollar after the Reserve Bank in a widely expected move cut key interest rates by 0.25 percentage point.

To boost the sagging economy, the RBI June 6 lowered its benchmark lending rate to a nearly nine-year low of 5.75% and changed its monetary policy stance to accommodative, leaving space for future rate cuts.

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FACT: India Was Destined To Prosper Regardless of Whether Modi Won Or Not…

The question on the minds of a lot of our readers until a few days ago was – "Who's going to come to power this time? And will India's growth, and more importantly my gains, be affected by who wins the election?"

Well, in the short term, may be.

But the fact of the matter was – in the long term, we have always believed India was destined for a potential MASSIVE upsurge regardless of whether Modi won or not.

Yes! It's all thanks to the once-in-2000 years economic phenomenon we call the Rebirth of India that could transform our country from developing to developed, take the Sensex past 100,000 and potentially making regular investors a LOT of money.

In fact, the Rebirth of India is actually MUCH bigger than the opening up the economy in 1991 too.

And Modi's re-election could actually act as a catalyst and help accelerate the entire thing.

That's why our Co-Head of Research, Tanushree Banerjee, has identified 7 specific stocks that she believes are potentially best placed to benefit from this coming surge.

But these stocks may not remain in the BUY range for long.

So hurry, just click here for full details now...
------------------------------

After opening on a weak note at 69.41 at the interbank forex market, the Indian unit fell further to 69.45 against the US currency.

Following the RBI's Monetary Policy Committee (MPC) decision, the local currency recovered most of the lost ground and settled for the day at 69.28, down 2 paise over its previous close.

The rupee had settled at 69.26 against the US dollar Tuesday.

Reportedly, foreign fund outflows and rising crude oil prices also kept pressure on the Indian rupee. Moreover, heavy selling in domestic equities also weighed on the local unit.

Foreign funds pulled out Rs 4.2 billion in the capital markets on a net basis Tuesday.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04% to 97.28.

Meanwhile, the 10-year government bond yield was at 6.9% on Thursday.

With the expectation of a rate cut on Thursday, the yield on the 10-year government bond yield closed below 7% for the first time since November 2017.

Bond Yields Falls Below 7%

Bond Yields Falls Below 7%

Besides expectations of a rate cut, other factors such as a decline in crude oil prices, fears of weaker global growth, and a fall in global bond yields impacted domestic bond yields.

A fall in yields would benefit the banking sector.

A reduction in the interest rate creates a conducive environment for lending. This would help to revive demand and growth in the economy.

Also, from the banks' perspective, a fall in yields would help to increase investment income on its bond portfolio. This would reflect in their quarterly earnings. This is because bond yields and bond prices move in opposite directions.

Now, how this pans out going forward remains to be seen.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Alembic Pharmaceuticals has received approval from the US health regulator for Carbidopa and Levodopa extended-release tablets.

These tablets are used for treatment of Parkinson's disease.

The approved products are therapeutically equivalent to the reference listed drug Sinemet CR tablets of Merck Sharp & Dohme Corp.

The company has received approval from the US Food and Drug Administration (USFDA) for its abbreviated new drug application Carbidopa and Levodopa extended-release tablets in the strengths of 2.5 mg/100 mg and 50mg/200 mg.

Quoting IQVIA sales data, the company said the two products had an estimated market size of US$ 24 million for 12 months ended December 2018.

The company said it now has a total of 94 abbreviated new drug application (ANDA) approvals from the USFDA.

Alembic Pharma share price opened the day up by 0.7%.

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


RBI's Repo Rate Cut, Global Stock Market Drivers and Top Stocks in Action
Pre-Open

The Indian share markets fell sharply and saw biggest one-day fall this year, dragged by banks after the RBI expectedly cut repo rate by 25 bps and changed policy stance to accommodative from neutral.

The BSE Sensex plunged 554 points to 39,530 and the Nifty50 slipped 178 points to 11,844.

GAIL was prominent loser among Nifty50, falling 12% followed by Indiabulls Housing, IndusInd Bank, Yes Bank and SBI which lost 4-8%.

Coal India, Titan Company, Hero Motocorp, Power Grid Corp and HUL bucked the trend, rising 1-2%.

Top Stocks in Focus

PSP Projects share price will be in focus today as the company has received new work orders worth Rs 1.6 billion during the financial year 2019-20 for institutional, industrial and residential projects from various clients.

Marksans Pharma said it received Establishment Inspection Report (EIR) from the USFDA in respect of inspection of the company's Goa facility carried out from 25th February to 6th March 2019.

DB Realty is going to increase its stake in Mahal Pictures (MPPL) upon settlement of disputes between erstwhile and existing shareholders of MPPL. In terms of the settlement, the company's holding in MPPL shall increase from existing 33.33% to 40%.

--- Advertisement ---
FACT: India Was Destined To Prosper Regardless of Whether Modi Won Or Not…

The question on the minds of a lot of our readers until a few days ago was – "Who's going to come to power this time? And will India's growth, and more importantly my gains, be affected by who wins the election?"

Well, in the short term, may be.

But the fact of the matter was – in the long term, we have always believed India was destined for a potential MASSIVE upsurge regardless of whether Modi won or not.

Yes! It's all thanks to the once-in-2000 years economic phenomenon we call the Rebirth of India that could transform our country from developing to developed, take the Sensex past 100,000 and potentially making regular investors a LOT of money.

In fact, the Rebirth of India is actually MUCH bigger than the opening up the economy in 1991 too.

And Modi's re-election could actually act as a catalyst and help accelerate the entire thing.

That's why our Co-Head of Research, Tanushree Banerjee, has identified 7 specific stocks that she believes are potentially best placed to benefit from this coming surge.

But these stocks may not remain in the BUY range for long.

So hurry, just click here for full details now...
------------------------------

Bharti Airtel's share price subsidiary - Airtel Payments Bank has enabled open loop BHIM UPI based payments at over 500,000 merchant points across India.

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

Results Corner

Market participants will track Orchid Pharma, United textiles, Lakshmi Energy, Ajanta Soya, Berger Paints, Bombay Rayon, Emami Realty among others as they announce their March quarter results today.

The Reserve Bank of India Cuts the Repo Rate by 25 bps

The Reserve Bank of India (RBI) has cut repo rate by 25 basis points to 5.75%. The central bank also changed its stance from 'neutral' to 'accommodative'. The reverse repo rate has also been altered to 5.50%.

This is the third consecutive time that RBI has cut rates by 25bps.

Indian economy has been experiencing a slowdown with unemployment at 45-year highs, CPI inflation excluding food and fuel down to 4.5% in April from 5.1% in March and a revision by the RBI on the GDP for FY20 from 7.2% to 7% indicates just that.

Global Stock Market Drivers

US equity-index futures and European shares advanced on Thursday as the prospect of easier monetary policy continued to help fuel a rebound in stocks. The appetite for risk was limited, however, and government bonds also rose.

Contracts for the three main American equity gauges picked up momentum in the European morning after the S&P 500 notched the biggest two-day rally since January.

Asia's benchmark gauge slipped, with a big decline in Shanghai shares despite a cash injection by China's central bank.

There are lingering concerns for global trade, with discussions between President Donald Trump's administration and Mexican officials ending Wednesday without agreement. Speaking in Ireland on Thursday morning, Trump touted progress in the negotiations as well as the pressure he's putting on China.

Here are some notable to watch out for:

  • The European Central Bank policy decision in focus.
  • Theresa May steps down today as leader of the Conservative Party.
  • Today US jobs report is projected to show payrolls rose by 180,000 in May, unemployment held at 3.6%, a 49-year low, and average hourly earnings growth sustained a 3.2% pace.
  • Finance ministers and central bank governors from the G-20 nations gather in Fukuoka, Japan this weekend.

From the Commodities Space...

Oil prices firmed on Thursday after falling to near five-month lows in the previous session, but sentiment stayed weak due to rising US supply and a stalling global economy.

Front-month Brent crude futures were at US$61 a barrel, up 0.6%. US West Texas Intermediate crude futures fetched US$51.84, up 0.3%.

The two benchmarks on Wednesday hit their lowest since mid-January at US$59.45 and US$50.60, respectively, amid a surge in US crude inventories and record production, and as a global economic slowdown was starting to hit energy demand.

Despite Thursday's gains, oil markets are moving into bear territory as defined by a 20% fall from recent peaks reached in late April.