Sensex Ends Over 300 Points Higher; Energy and Metal Stocks Witness Buying
Closing

After opening the day marginally lower, Indian share markets witnessed most of the buying interest during closing hours and ended their trading session on a strong note. Gains were largely seen in the energy sector, metal sector and realty sector.

At the closing bell, the BSE Sensex stood higher by 312 points (up 0.8%) and the NSE Nifty closed higher by 97 points (up 0.8%). The BSE Mid Cap index ended the day up 0.7%, while the BSE Small Cap index ended the day up by 0.3%.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 1.3% and the Shanghai Composite was down by 0.9%. The Nikkei 225 was down 0.4%.

The rupee was trading at 69.35 against the US$.

The domestic currency is presently trading higher driven by easing crude oil prices and foreign fund inflows.

Yesterday, the rupee recovered from day's low and ended 23 paise higher at 69.35 against the US$ amid weakening of the greenback against other major currencies.

In the last few sessions, the dollar has been weighed down following expectation that the Federal Reserve in the near future is expected to cut rates.

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In the news from the retail sector, Trent share price was in focus today. Stock of the company witnessed buying interest today after the company said it was seeking shareholder's approval to allot up to 24.7 million equity shares to Tata Sons.

So far this week, the Tata group retail chain's subsidiary has surged 10% after its board approved raising up to Rs 15.5 billion through a mix of issue of shares to its promoter Tata Sons on a preferential basis, and other options to fund its expansion.

The company said, "total amount to be raised from issuance of shares to the promoter is about Rs 9.5 billion, which the company plans to utilise to finance its expansion and reduce debt,"

After the transaction, the stake of Tata Sons, holding company of Tata Group, in Trent will increase to 33% from the current 28%.

According to reports, accelerated store addition in the Westside format, right-sizing of Star Bazaar stores coupled with consistent growth in Zara are further expected to accelerate Trent's financial performance.

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

In the news from the commodity space, oil prices remained steady as concerns over declining crude demand were offset by risks to supply linked to new US sanctions on Iran.

Hopes for progress in the trade war between China and the United States during this week's G20 meeting were dampened by a comment from a senior US official saying US President Donald Trump was "comfortable with any outcome" from the talks.

Demand concerns weighing on oil prices were briefly overcome last week when Brent climbed 5% and US crude surged almost 10%, its strongest week since 2016, after Iran shot down a US drone on Thursday, adding to tensions stoked by attacks on oil tankers in the area in May and June.

We will keep you updated on all the developments from this space. Stay tuned.

To know more about commodity and currency markets and which are the best counters to trade in this space, you can read one of Vijay Bhambwani's recent articles: Why Do I Recommend Trading Only Nickel, Crude oil, Gold, Copper, and USDINR?

Moving on to the news from the finance sector, shares of Dewan Housing Finance Corporation (DHFL) slipped over 5% in today's session, breaking the winning streak of last three sessions, when it jumped 25%.

In a BSE filing on Monday, the company said it had paid Rs 26.7 million in interest on its non-convertible debentures.

The board of directors of the company is scheduled to meet on Saturday, June 29, 2019, to consider and approve audited financial results for March quarter and for the financial year ended March 31, 2019.

Media reports also suggested that lenders of DHFL may meet in July first week to work out a rescue package for the debt-ridden firm.

The rescue package may include reworking of loan payments, fresh working capital support, roping in a financial investor and putting a new management team in place.

A number of lenders, including State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank, Union Bank and others have a total exposure of over Rs 400 billion to DHFL.

DHFL share price ended the day down by 3.6%.

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.

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

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

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.

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


Sensex Trades Marginally Higher; Power and Energy Stocks Witness Buying
12:30 pm

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

The BSE Sensex is trading up by 93 points (up 0.2%), while the NSE Nifty is trading up by 31 points (up 0.3%).

The BSE Mid Cap index is trading up by 0.3%, while the BSE Small Cap index is trading up by 0.1%.

In the news from the macroeconomic space, the Reserve Bank of India (RBI) has launched a single window for customer complaints relating to banks and non-banking finance companies (NBFCs) through an online portal.

With the help of this portal, customers can file a complaint and track its status. The complaints will be directed to the appropriate office of the Ombudsman or regional office of the RBI. Customers can also file an appeal against the decision of the Ombudsmen if need be.

The Complaint Management System (CMS) application that facilitates this feature was unveiled by the RBI on June 24, with an aim to speed up the process of customer grievance redressal. The portal is accessible on desktop as well as mobile devices.

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RBI said that CMS can generate various reports to monitor and manage complaints that pertain to each entity and such data will be used by the central bank for regulatory and supervisory interventions.

The above move is certainly a step towards removing the inefficiencies in the banking and NBFC sector.

Speaking of NBFC space, the liquidity crisis, a slew of corporate defaults, and the bloodbath in many stocks from this sector has left investors in deep fear and panic.

However, it is not that all NBFCs have fared badly.

In a recent edition of The 5 Minute WrapUp, Ankit Shah has picked the top three NBFC gainers and losers (in terms of market capitalisation) over the last one year.

As can be seen in the chart below, while several NBFCs have suffered badly and destroyed investor wealth, there have also been quality NBFC stocks that have been wealth creators.

NBFC Crisis - Top Gainers and Losers

NBFC Crisis - Top Gainers and Losers

So, as Ankit shares, the key takeaway here is to never write off an entire sector and to always stay on the lookout for quality stocks in sectors going through temporary headwinds.

In fact, in Ankit's premium newsletter Insider, one of his cherry-picked housing finance stock has performed quite well despite the NBFC crisis.

In the news from pharma sector, Alembic Pharma share price is in focus today. The stock of the company is witnessing buying interest after it announced it has received approval from the US health regulator for Oseltamivir Phosphate capsules, used for treatment of influenza infection.

The company in a BSE filing stated the approval from the United States Food and Drug Administration (USFDA) is for the company's abbreviated new drug application (ANDA) for Oseltamivir Phosphate Capsules USP in the strengths 30 mg, 45 mg and 75 mg.

The approved product is therapeutically equivalent to the reference listed drug (RLD), Tamiflu Capsules of Hoffman-La Roche, Inc.

As per the data, Oseltamivir Phosphate capsules has an estimated market size of US$ 647 million for 12 months ending December 2018.

Note that Alembic Pharma currently has a total of 97 ANDA approvals (85 final approvals and 12 tentative approvals) from USFDA.

In the news from the FMCG sector, Emami share price was also in focus today. This came as shares of the company witnessed buying interest after eight consecutive sessions of losses.

The buying was seen a day after promoters sold 10% of their equity holdings in the company for Rs 12.3 billion to pare debt.

Data yesterday showed that around 34.6 million shares, representing 7.6% of Emami's total equity capital, changed hands on the BSE through block deals.

As of March 2019, out of 62.7% promoters' holding in Emami, 47.7% stake were pledged with the lenders. According to exchange filings, Emami promoters have pledged shares with Axis MF AMC, Tata Capital Financial Services, IndusInd Bank, DCB Bank, Hero Fincorp and others.

Earlier in February, Emami had said its promoters sold 10% stake in the company for Rs 16 billion to reduce promoter debt which was used in creation of assets like cement, solar power, etc.

Funds like SBI Mutual Fund, Premji Invest, Amundi, IDFC and others, were the buyers, thereby reducing the promoter holding in Emami to 62.7% from 72.7% as on December 31, 2018.

To know more about the company, you can read Emami's Q4FY19 Result Analysis on our website.

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


Indian Indices Open Lower; IT & FMCG Stocks Drag
09:30 am

Asian share markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 1.8% while the Hang Seng is down 1.3%. The Nikkei 225 is trading lower by 0.2%.

Back home, India share markets have opened the day on a negative note. The BSE Sensex is trading down by 133 points while the NSE Nifty is trading lower by 45 points. The BSE Mid Cap index and BSE Small Cap index have opened the day on a flat note.

Sectoral indices opened on a mixed note with stocks in the IT sector and FMCG sector witnessing selling pressure, while oil & gas stocks and realty stocks are witnessing buying interest.

The rupee is currently trading at Rs 69.32 against the US$.

Speaking of Indian share markets, what should be your investing strategy be for Modi's second term?

As per Richa Agarwal, Modi's victory seems to be the inflection point for a rebound in smallcap stocks.

You see, over the last one and a half year, a huge gap has emerged between smallcap index and Sensex.

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The Secrets Identifying  10X StocksIf you're one of those who believes India is destined to become a global superpower, then here's some good news…

We believe a rare economic phenomenon could push the Sensex past 100,000 and give regular folks an opportunity to make BIG returns.

Our new hardbound book on it provides the full scoop. And for a limited time, you could get a copy of this book worth Rs 1,950 virtually FREE.

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Despite a lackluster performance on earnings front for both, smallcap stocks crashed...while Sensex flirted with lifetime highs.

Have a look at the chart below.

Since Jan 2018, the Sensex has gained 14% while smallcap index has lost 25%. That's a relative underperformance of 39%.

But this dichotomy cannot keep on growing forever.

As Richa writes in a recent edition of The 5 Minute WrapUp...

  • You see, last time the market showed a similar trend was in the year 2013...just before Modi rose to power.

    Between January 2013 to August 2013, the smallcap index has crashed by over 30%, while Sensex stayed put. And smallcaps were approached with the same scepticism they have witnessed over the last year.

    But what happened after that was even more interesting.

    Within a few months post August 2013, the smallcap index caught up with the Sensex. And it didn't just catch up.

    Under Modi's first term, until January 2018, the smallcap index rose nearly four times versus a less than 2 times gain in Sensex.

As per Richa, history is going to repeat itself.

If you are interested in riding the volatility and earning great returns in the long term, you could join Richa's small cap club and invest in these 4 solid small caps.

In the news from the engineering sector, Larsen & Toubro (L&T) share price is in focus today. The founders of Mindtree on Monday lost their last line of defence against L&T's takeover bid as Nalanda Capital sold its entire 10.6% stake to the engineering major.

Sources said after putting up a stiff resistance, Nalanda Capital, which was so far seen as a supporter of founder's stance, tendered its shares in the open offer on Monday.

Multiple sources also said that apart from Nalanda Capital, Singapore-based Arohi Asset Management has also offloaded its 1.2% stake.

According to data available on exchanges, L&T's holding in Mindtree has crossed 45% mark by Monday. As of June 24, the engineering major has received 17.5% stake in Mindtree through the open offer.

The process of open offer for acquiring 31% stake in the IT firm is going on, which will be completed on June 28.

According to reports, Nalanda's exit from Mindtree could be linked to the fact that some investors had complained against the fund house to be acting in concert without market regulator's approval, along with alleged attempt to influence other investors for not tendering their shares.

Last week, Mindtree's board approved induction of five new directors into the company's board, which will come for shareholders' approval in its next annual general meeting on July 16.

The appointment includes L&T's Chief Executive Officer (CEO) and Managing Director S N Subrahmanyan and its Chief Financial Officer (CFO) Ramamurthi Shankar Raman. Apart from this, Jayant Damodar Patil, whole time director and senior executive vice-president for L&T's defence business, will also be part of the firm's board.

In March, L&T had initiated a hostile takeover bid on Mindtree when it entered into a deal to buy Cafe Coffee Day owner V G Siddhartha's 20.3% stake.

As per the reports, the combination of the two companies will help create an entity with a higher turnover of close to Rs 120 billion, closer to larger rivals such as Wipro and TCS.

While the L&T-Mindtree saga will one day disappear into the history books, the lessons will not.

One thing that we must bear in mind is that most companies in India are managed by promoters.

Hence, they are bound to protect their interest and will not relinquish control without a fight.

This means that the company launching such an attack needs to be very clear as to why it wants to go down this route. Here's snippet from the article on hostile takeovers that Tanushree Banerjee, co-head of research wrote:

  • "In mergers and acquisitions, in general, the acquiring company has to make sure that it pays a reasonable price for the target company. It needs to gauge the synergies that are likely to flow in on making the acquisition such that the payback period is not too long. Many a time, when competition for a particular target heats up, valuations soar. As a result, the company which has finally made the acquisition ends up paying a very high price."

This applies to hostile takeovers as well.

Moving on to the news from the IT sector, Tata Consultancy Services (TCS) has increased it stake by 15% in TCS Japan, its joint venture (JV) with Mitsubishi Corporation (MC), with an investment of US$ 32.6 million.

Following the stake hike, TCS will hold 66% equity in TCS Japan, up from 51%, and Mitsubishi will hold 34%. Current governance of operations and management will remain unchanged by the share acquisition.

CEO and President of TCS Japan, Amur S Lakshminarayanan said, "we are pleased to note that Mitsubishi Corporation is now more assured of the partnership, having experienced TCS' services as a customer over the past five years, and that both companies continue their strong collaboration to grow the business together,"

TCS share price is presently trading down by 0.6%.

To know more about the company, you can read the TCS' latest result analysis and TCS' FY19 annual report analysis on our website.


Indian Indices End Flat, Crude Oil Continues Momentum, and Top Cues in Focus Today
Pre-Open

India share markets ended marginally lower yesterday.

At the closing bell yesterday, the BSE Sensex stood lower by 71 points (down 0.2%) and the NSE Nifty closed down by 24 points (down 0.2%).

The BSE Mid Cap index ended the day down 0.3%, while the BSE Small Cap index ended the day down 0.2%.

Sectoral indices ended on a mixed note with stocks in the metal sector, energy sector and realty sector witnessing most of the selling pressure.

Top Stocks in Focus Today

From the FMCG sector, Emami share price will be in focus today. Shares of the company slipped around 7% yesterday to hit over four-year lows of Rs 270, after huge block deals were encountered on the exchanges. Shares were trading at their lowest level since August 8, 2014 on the BSE.

From the energy sector, Suzlon Energy share price will be in focus today. Shares of the company witnessed buying interest yesterday after the company told its lenders that Canadian investor Brookfield is keen to acquire a majority stake in the company.

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Why This Could Be The Most Important Book You'll Ever Read…

The Secrets Identifying  10X StocksIf you're one of those who believes India is destined to become a global superpower, then here's some good news…

We believe a rare economic phenomenon could push the Sensex past 100,000 and give regular folks an opportunity to make BIG returns.

Our new hardbound book on it provides the full scoop. And for a limited time, you could get a copy of this book worth Rs 1,950 virtually FREE.

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

JMC Projects share price will also be in focus today as the company said it has won contracts worth Rs 5.1 billion for residential and commercial projects and factory works. The orders include residential and commercial projects in south and west India totaling Rs 3 billion and factory works from a multinational client in east India worth Rs 1.1 billion.

Market participants will also be tracking DHFL share price today as it was announced that the company's lenders will meet in the first week of July to work out a rescue package for Dewan Housing Finance Corporation (DHFL).

The key talking points of the meeting will include restructuring of loans to ensure repayment, fresh working capital support, inducting a new financial investor and a new management team to be put in place.

RBI Deputy Governor Viral Acharya Said to Quit Before Term

In the news from the economy, Reserve Bank of India's (RBI) Deputy Governor Viral Acharya is said to have quit six months before the scheduled end of his term to return to New York University Stern School of Business (NYU stern) in August as CV Starr Professor of Economics.

Acharya, who joined the central bank on January 23, 2017, was RBI's youngest deputy governor post economic liberalisation.

As per the news, Acharya has been uncomfortable ever since the exit of Urjit Patel as Governor of RBI. His academic views of the financial system were in contrast with the rest of the system.

In the over 90-minute long speech, Acharya, who was in charge of the monetary policy department, warned of the wrath of the markets if the autonomy of a central bank was compromised. Acharya had explicitly said he had the backing of the then Governor Patel for making the speech.

Reports also stated that another RBI's Deputy Governor NS Vishwanathan, whose term is due to end in the first week of July is likely to stay back for another two-year term. The process for finding Vishwanathan's successor has been put on hold.

Crude Oil Continues Momentum

Moving on to the news from the commodity space, crude oil prices inched higher yesterday on the back of tensions between Iran and the United States.

As per the news, US Secretary of State Mike Pompeo said significant sanctions on Tehran would be announced soon which will be aimed at further choking off resources that Tehran uses to fund its activities in the region.

Last week, crude oil prices gained momentum over a possible trade deal between US & China amid fresh concerns arising from the Middle East.

In the coming days, market participants will be tracking the G20 summit which is to be conducted in Japan later this month where US President Donald Trump will likely meet Chinese President Xi Jinping.

The two countries will resume with the trade talks before the presidents of the two countries meet in Japan.

Markets will also be closely tracking crude oil prices in the coming weeks ahead of the OPEC meet. The members of the Organization of the Petroleum Exporting Countries (OPEC) have agreed to meet on July 1, followed by a meeting with non-OPEC allies on July 2 where they will discuss whether to extend a deal on cutting 1.2 million barrels per day of oil production that runs out this month.

We will keep you updated on all the developments from this space. Stay tuned.

To know more about commodity and currency markets and which are the best counters to trade in this space, you can read one of Vijay Bhambwani's recent articles: Why Do I Recommend Trading Only Nickel, Crude oil, Gold, Copper, and USDINR?

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