Sensex Ends 194 Points Lower; Realty and Telecom Stocks Witness Selling
Closing

Share markets in India continued to trade in the red during closing hours and ended their trading session lower. Barring metal sector and FMCG sector, all sectoral indices ended on a negative note with realty stocks and telecom stocks witnessing most of the selling pressure.

At the closing bell, the BSE Sensex stood lower by 194 points (down 0.5%) and the NSE Nifty closed down by 59 points (down 0.5%). The BSE Mid Cap index ended the day down by 0.8%, while the BSE Small Cap index ended the day down by 0.5%.

The rupee was trading at 69.33 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 1.7% and the Shanghai Composite was down by 0.6%. The Nikkei 225 was down 0.4%.

From the banking sector, Yes Bank share price was in focus today.

Stock of the lender witnessed selling pressure after the rating agency Moody's yesterday placed the bank's ratings under review for a downgrade.

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The agency placed Yes Bank's ratings under review for a downgrade citing its large exposure to debt-laden non-banking financial companies (NBFC) and the possibility that the bank's loans under watch list could slip into non-performing assets (NPAs).

Meanwhile, Mukesh Sabharwal, chairman of the nomination and remuneration committee of the bank, quit on Tuesday citing personal reasons.

Earlier, ICRA had downgraded Yes Bank's tier-I and tier-II bonds and infrastructure debt on deterioration in the credit quality of large ticket borrowers.

In the news from commodity space, crude oil witnessed selling pressure today. Oil prices fell over 1% on the back of a weaker oil demand outlook and a rise in US crude inventories despite growing expectations of ongoing OPEC-led supply cuts.

The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude oil production in a monthly report released yesterday.

The EIA lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd. It wound back its forecast for 2019 US crude production to 12.32 million bpd. This is 140,000 bpd less than the May forecast.

Apart from the above, a surprise increase in US crude stockpiles also kept oil prices under pressure.

According to data from the American Petroleum Institute (API), US crude inventories rose by 4.9 million barrels in the week ended June 7 to 482.8 million barrels. That compared with analysts' expectations for a decrease of 481,000 barrels.

Also, ongoing trade tensions between the United States and China, the world's two biggest oil consumers, weighed on prices. US President Donald Trump said on Tuesday he was holding up a trade deal with China.

The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) is going to take place at the end of June and market participants are eyeing whether the world's major oil producers would prolong their supply cuts.

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

Speaking of crude oil, note that 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.

In the news from macroeconomic space... In a paper published this month, Arvind Subramanian said that based on various metrics, India did not grow at the heroic 7% per year between 2011-12 and 2016-17, as we were officially informed.

Indeed, as per his remarks, average annual growth stood at a measly 4.5% per year, on average, during FY12-FY17.

He has made two important points to justify his argument. One, he uses 17 key factors, including two-wheeler, tractor and truck sales, electricity consumption, manufacturing numbers, rail freight and so on, as proxies to measure overall growth.

He finds that before 2011, most of these above factors, especially manufacturing production and exports, moved in tandem with overall growth. Thereafter, for no perceptible reason, manufacturing growth raced ahead, dragging GDP growth upward. As per him, while manufacturing is the main culprit, other sectors too followed the same pattern.

Another point to justify his numbers is that India's growth, measured against an average of 71 other growing nations was in line till 2011. Thereafter, compared to all these nations, India shot ahead. As per him this, statistically, is about as likely as locating a needle on the surface of Mars - without a telescope.

You can read more about his analysis and find the entire research paper here.

In an article in The Indian Express released yesterday, Subramanian mulls over the consequences of reduced growth during this period.

So, what does all of this mean for India?

Has the Indian economy slowed down much more than expected?

We don't know. But we do know that over the next few weeks a lot of ink and clicks are going to be devoted to understanding the past.

While there's some merit to that effort...we believe a more beneficial exercise may be to understand what lies ahead.

You see, we believe that India is destined to prosper.

In fact, as per co-head of research, Tanushree Banerjee, there are certain irreversible trends which will set the stage for msassive growth in India over the next decade...leading to what she calls the Rebirth of India.

In all, has discovered 50 irreversible trends that are changing our country for the better. These changes will be permanent, and they will have huge consequences for wealth creation in the stock market.

Tanushree has already identified 7 stocks that are likely to benefit from this trend. She believes these stocks are in the right place at the right time. They're the best stocks to buy on the journey to Sensex 100,000.

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


Sensex Trades Lower; CPI Inflation Data Eyed
12:30 pm

Stock markets in India are presently trading on a negative note ahead of the release of key macro data such as CPI inflation for May and IIP growth print for April. The BSE Sensex is trading down by 278 points and the NSE Nifty is trading down by 82 points. Meanwhile, the BSE Mid Cap index and the BSE Small Cap index are trading down by 0.5% and 0.3% respectively.

Among the sectoral indices, IT stocks and realty stocks are witnessing maximum selling pressure. Metal and oil & gas stocks are trading in green.

Notably, Indian markets have been on the rise since the Narendra Modi-led coalition won a massive mandate to form the government for the second consecutive time.

In May, the benchmark Sensex rose 1.8%. In the year so far, Sensex has gained over 10%.

So, by the next elections in 2024, will Sensex touch 1,00,000 mark?

Does Sensex 1,00,000 sound outrageous from where we are right now?

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This limited-edition hardbound book costs Rs 1,950 to buy on Amazon. But you could get a copy of it virtually FREE today!

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------------------------------

Even Sensex 40,000 would have seemed the same from around 5,000 levels in May 2004.

History indicates a healthy rise in Sensex post elections. In the three elections prior to this, we have seen a government come back to power, and change hands but the Sensex has moved one way i.e. upwards.

Will the Sensex Be Close to 1,00,000 By the Next Election?

Will the Sensex Be Close to 1,00,000 By the Next Election?

And now, with a stable government at the centre, the pace might pick up.

Co-head of research, Tanushree Banerjee believes there are 50 irreversible trends that will the push Sensex to 1,00,000.

And these 50 trends look set to play out soon.

The ride might have already begun looking at the stock market's reaction to the election results.

But it is still early days. And the time to hop on to the ride is right now!

In the news from the currencies space. The rupee appreciated by 8 paise to 69.38 against the US dollar in opening trade today, driven by easing crude oil prices and foreign fund inflows.

Reportedly, weakening of the greenback vis-a-vis some major currencies overseas aided the local unit.

However, a weak opening in domestic equities weighed on the domestic currency.

The rupee opened strong at 69.38 at the interbank forex market, then gained further ground and touched 69.36, displaying gains of 8 paise over its last close.

The local unit however, pared some gains and was trading at 69.38, up 6 paise from its previous close in the morning session. The rupee had settled at 69.44 against the US dollar Tuesday.

Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 957.9 million on Tuesday, according to provisional exchange data.

Speaking of currencies, Vijay Bhambwani, editor of Weekly Cash Alerts, tells you the main reasons why not to trade commodities and currencies the same way you would trade equities. Here's an excerpt of what he wrote...

  • Currencies are traded in pairs and the most liquid is the USDINR. Currencies are traded in four decimal points just as bonds are. The international derivative traders association has indicated that forex may be traded in 6 decimals in the coming few years.

    It takes months sometimes for the currency pair to pass the next round figure, say from 70 to 71.

    Can you really trade commodities and currencies alike or for that matter, equities and currencies alike? Definitely not!

To know more, you can read Vijay's entire article here: Is Trading in Equities, Commodities, and Currencies the Same?

Moving on to the news from the finance sector. Shares of Indiabulls Housing Finance continue to shrink today following allegations of siphoning off Rs 980 billion of public money.

The stock had hit a 52-week low of Rs 576.4 on Tuesday after the report and ended the session falling 8%. The company has lost Rs 70 billion so far.

The company has now moved the Supreme Court alleging that the plea against it alleging misappropriation of 980 billion public money is frivolous. The court said it will take a decision on listing of the plea during the day.

The share of the company today was trading near four-month low.

The stock was down 21% this year as of the last close.

A plea was filed in the Supreme Court on Monday seeking legal action against Indiabulls Housing Finance, its chairman and directors for alleged misappropriation of public money.

Terming the allegations as bizarre, Indiabulls Housing Finance on Monday said the writ petition filed in the apex court is an attempt to malign the company's reputation and create hurdles in its merger with Lakshmi Vilas Bank.

The total loans on the books of Indiabulls Housing Finance is approx Rs 900 billion, the reports noted.

Indiabulls housing finance share price was trading down by 6.7%b at the time of writing.

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


Indian Indices Open Lower ahead of Inflation Data; Telecom & IT Stocks Drag
09:30 am

Asian share markets got off to a cautious start after US President Donald Trump stoked fears of escalation in trade war. The Nikkei 225 is down 0.1% while the Hang Seng is down 1.5%. The Shanghai Composite is trading down by 0.6%.

Back home, India share markets have opened the day on a negative note. The BSE Sensex is trading down by 136 points while the NSE Nifty is trading down by 44 points. The BSE Mid Cap index and BSE Small Cap index both opened the day down by 0.2%.

Sectoral indices are trading on a mixed note with stocks in the telecom sector and IT sector witnessing maximum selling pressure, while metal stocks and energy stocks are trading in green.

The rupee is trading at Rs 69.37 against the US$.

In the news from the finance sector, Dewan Housing Finance Limited (DHFL) has paid Rs 9.6 billion interest on non-convertible debentures (NCD), according to a release filed with the exchanges on June 11. The payments were made within the cure period of seven working days.

On June 6, rating agencies ICRA share price and CRISIL share price downgraded the company's rating on Rs 8.5 billion worth of commercial paper to 'default', down from 'A4' due to the mortgage lender's deteriorating liquidity condition.

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However, here's the catch…

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------------------------------

DHFL had commercial papers (CP) worth Rs 7.5 billion maturing this month. Last month, the company announced that it had stopped accepting fresh inflows in fixed deposits (FDs). It also stopped renewals and put premature withdrawals from existing fixed deposits on hold.

On May 17, CARE ratings had downgraded the company's FD programme worth Rs 200 billion from 'A' to 'BBB'.

The NBFC space has been under pressure since September last year after IL&FS defaulted on crucial payments, triggering fears of a liquidity crisis.

DHFL share price has opened the day up by 4%.

Speaking of non-banking financial companies (NBFCs), note that NBFCs were flush with funds from banks, insurance companies, and asset management companies i.e. mutual funds in 2016.

And with these funds and without the necessary restrictions, NBFCs become reckless in deploying the funds.

You can see this clear as day in the chart below...

One Chart that Predicted the NBFC and Mutual Fund Crisis Back in 2016

One Chart that Predicted the NBFC and Mutual Fund Crisis Back in 2016

Here's what Tanushree Banerjee wrote about this in today's edition of The 5 Minute WrapUp...

  • Let's look back at 2016...

    Banks, mutual funds, and insurance companies were competing with each other to lend to NBFCs.

    And why not?

    Not only were the fast growing NBFCs hungry for funds, they also offered attractive yields.

    The NBFCs took more risk than banks by lending without collaterals. But they charged higher interest rates; which meant their margins remained far higher than that of banks.

    It's no wonder the NBFCs caught everyone's fancy. In fact, between 2013 and 2016, the top NBFCs saw their valuation multiples move up three to eight times.

As per Tanushree, the problem in the NBFC sector is far from over. But she believes the good quality NBFCs, and housing finance companies will continue to flourish and you can make the most of the opportunity by buying the safest NBFCs.

Moving on to the news from the aviation space, the pilots' union of cash strapped Jet Airways will file a plea against the grounded airline at the National Company Law Tribunal (NCLT) for non-payment of salaries and not providing a provision for gratuity payment to its staff.

The union counted about 1,100 of the airline's 1,600 pilots as its members before the grounding of the carrier. Reports state that the airline hasn't paid salaries since January and also haven't made any provisions for gratuity.

Two operational creditors of Jet Airways, Shaman Wheels Pvt. Ltd and Gaggar Enterprises Pvt. Ltd, had filed separate insolvency pleas against the airline earlier this week at the NCLT, Mumbai, for recovery of their dues.

Reports state that in case Jet does not end up being liquidated and insolvency is resolved then the new investor who bails out Jet would need to take on the liability including salaries.

In any case, if Jet Airways is admitted to the National Company Law Tribunal, under bankruptcy resolution lenders may recover only a fraction of the Rs 84 billion the airline owes them.

The total liabilities of the airline, including unpaid salaries and vendor dues, are nearly Rs 150 billion. Yesterday, it was reported that the Hinduja Group and Etihad Airways may not proceed with plans to resurrect the airline.

Shares of the company fell as much as 15% to hit an all-time low of Rs 106 on back of the above news.

It would be interesting to watch out how things pan out in this space. Meanwhile, we will keep you updated on all the developments.

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


Indian Indices Continue Momentum, Crude Oil Prices, and Top Stocks in Action Today
Pre-Open

On Tuesday, share markets in India traded on a positive note most of the day and ended higher.

The BSE Sensex closed higher by 166 points to end the day at 39,950. Tata Motors and ONGC were among the top gainers.

While the broader NSE Nifty ended up by 43 points to end at 11,966.

Among BSE sectoral indices, metal stocks gained the most by 1.3%, followed by banking stocks and energy stocks.

Top Stocks in Action Today

Eicher Motors share price and Volvo Group's joint venture (JV) - VE Commercial Vehicles has called for fiscal measures to boost growth in the auto sector. The company is also planning to invest Rs 7 billion this fiscal, a part of which will go into adding capacity.

Bharat Dynamics share price has signed a contract worth Rs 11.9 billion for supply of heavy weight torpedoes.

Bharat Heavy Electricals (BHEL) share price has also secured a prestigious order for the work of the upcoming Turbine Generator (TG) island Units 3&4 at Kudankulam Nuclear Power Project in Tamil Nadu.

Wipro share price has rolled out total operations system (TOPS) crew, a fully-integrated IT product suite for global airlines. Developed jointly by the company and Qatar Airways in an innovative co-investment model, TOPS is one of the most advanced products available in the aviation market.

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The Most Important Book One Could Read After Modi's Re-Election

The Secrets Identifying  10X StocksWhat you see to your right is in our view the most important book one could read after Modi's Re-Election.

This limited-edition hardbound book costs Rs 1,950 to buy on Amazon. But you could get a copy of it virtually FREE today!

However, here's the catch…

Nearly 1,000 copies of this book have been claimed already. And only a few more copies remain. So don't delay.

Click here to claim your virtually FREE copy now!
------------------------------

IPO Buzz

The 150-years-old privately held conglomerate, Shapoorji Pallonji Group, is planning to make its first initial public offering with a Rs 45 billion issue of arm Sterling & Wilson Solar.

The group is exploring various ways to unlock value and deleverage balance sheet, as it faces rising cost pressures and sluggish sales volumes. The IPO of Sterling & Wilson Solar, the group's solar power engineering, procurement and construction (EPC) business, could be the first on this front.

Proceeds from the issue will be used by the promoters to capitalise the parent company, which can in turn repay the loans it has taken from Sterling & Wilson Solar, making it a zero-debt company.

Sterling & Wilson Solar's total order book stood at Rs 65.1 billion as of December 31, 2018.

From the Commodities Space...

Oil prices steadied above US$ 62 per barrel on Tuesday on expectations that OPEC and its allies will keep withholding supply. On Monday, Russia said it might support an extension of OPEC-led supply cuts that have been in place since January.

The price of Brent is down almost 20% from its 2019 peak above US$ 75 a barrel in April, pressured by an economic downturn that has started to impact oil demand.

Reportedly, OPEC+ is due to meet in late June or early July to decide whether to extend the pact. Russia's comments on Monday, and remarks last week from Saudi Arabia, bolstered expectations the deal will be renewed.

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.

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.

From the Macroeconomic Space...

Former chief economic advisor Arvind Subramanian believes India's average annual growth between 2011-12 and 2016-17 may have been overestimated by about 2.5 percentage points.

In a new research paper, made public on Tuesday moring, Subramanian has pointed out that that instead of the reported growth of 6.9% between 2011 and 2016, actual growth was more likely to have been between 3.5% and 5.5%.

The paper traces "part of the overestimation" to a key methodological change in the way India calculated GDP.

In an article in The Indian Express early morning today, Subramanian mulls over the consequences of reduced growth during this period.

So, what does this mean for India? Has the Indian economy slowed down much more than expected?

We don't know. But we do know that over the next few weeks a lot of ink and clicks are going to be devoted to understanding the past.

While there's some merit to that effort...we believe a more beneficial exercise may be to understand what lies ahead.

You see, we believe that India is destined to prosper.

In fact, as per co-head of research, Tanushree Banerjee, there are certain irreversible trends which will set the stage for massive growth in India over the next decade...leading to what she calls the Rebirth of India.

In all, she has discovered 50 irreversible trends that are changing our country for the better. These changes will be permanent, and they will have huge consequences for wealth creation in the stock market.

Tanushree has already identified 7 stocks that are likely to benefit from this trend. She believes these stocks are in the right place at the right time. They're the best stocks to buy on the journey to Sensex 100,000.