Sensex Ends 86 Points Lower; Capital Goods and Telecom Stocks Witness Selling
Closing

India share markets witnessed selling pressure during closing hours and ended their volatile day on a negative note.

At the closing bell, the BSE Sensex stood lower by 86 points (down 0.2%) and the NSE Nifty closed down by 30 points (down 0.3%).

The BSE Mid Cap index ended the day up 0.4%, while the BSE Small Cap index ended the day up 0.2%.

Sectoral indices ended on a negative note with stocks in the capital goods sector and telecom sector witnessing most of the selling pressure.

The rupee was trading at 68.62 against the US$.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 0.1% and the Shanghai Composite was up by 0.4%. The Nikkei 225 was up 0.2%.

European markets were also trading on a positive note. The FTSE 100 was up by 0.27%. The DAX was trading up by 0.04%, while the CAC 40 was up by 0.61%.

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The Secret Behind the Mind Numbing Success of Wipro, MRF and Titan

Wipro, MRF, and Titan are all well-known Indian companies from very different sectors.

But there is something about these companies that makes them very similar as well…

And we are not talking about the fact that they made their investors very rich.

We are going one step back…

You see, these companies share THREE UNIQUE TRAITS that are the true reason behind their massive success.

The reason why they converted ordinary investors into Crorepatis.

And we believe that looking for these same three unique traits in companies could help identify the next Wipro or MRF or Titan.

We know even the thought of finding such a company is extremely exciting.

Now, what if we told you, that you could find details of one such company right now?

Yes, after years of research, we are ready to reveal details of a company that shares the same unique traits as Wipro, MRF and Titan…

Now we know you are very interested…

Just click here to read all about these unique traits and the stock…
------------------------------

Speaking of the current mood in Indian share markets, the post-budget reaction saw a negative reaction from the market participants.

Most of the losses came as the Union Budget failed in offering bold plans and a clear roadmap for propping up the economy.

While the markets gave a thumbs-down to the Budget, Tanushree Banerjee's Rebirth of India call remains intact.

In the video below, she explains how investors could continue to make the most of the irreversible trends and India's US$ 5 trillion potential.

In the news from the banking space, IndusInd Bank share price was in focus today as the private sector lender reported a healthy growth in June quarter earnings after the merger of Bharat Financial Inclusion with itself. The numbers are not comparable on a year-on-year (YoY) basis due to this development.

During the quarter, net profit of combined entity stood at Rs 14.3 billion for the quarter ended June 2019.

Net interest income (NII), the difference between interest earned and interest expended, grew by 34% YoY at Rs 28.4 billion.

Gross NPA stood at 2.15% in the June quarter against 2.10% sequentially. Net non-performing assets (NPA) came in at 1.25% compared with 1.2% on a quarter-on-quarter (QoQ) basis.

The lender's absolute gross NPA stood at Rs 42 billion against Rs 39.4 billion in March quarter.

Provisions of the bank inched up to Rs 4.3 billion on a yearly basis from Rs 3.5 billion, while they saw a big slump from Rs 15.6 billion on a quarterly basis.

Speaking of the banking sector, it was reported last week that the scheduled commercial banks (SCBs) credit growth moderated to 12% YoY compared with 12.7% growth in May 2019. The credit growth has improved from 10.9% at end June 2018.

Co-head of Research at Equitymaster, Tanushree Banerjee believes retail and corporate credit are expected to grow by multi-fold over the next few years.

Rising Credit Growth in India

Rising Credit Growth in India

Here's what she wrote about it in one of the recent editions of The 5 Minute WrapUp...

  • One theme I strongly believe will play out over the next decade is the credit growth in India.

    The growth I foresee will be due to two reasons. Expanding GDP and credit penetration.

    Recent reforms like Jan Dhan, Mudra Yojna have helped Small and Medium Enterprises (SME's) and self-employed professionals to gain access to loans.

    Credit penetration is also expected to increase in this segment from current levels.

    Over the past few years, a lot of banks and NBFCs have started lending to this segment.

So look out for strong well-established financial services players which will benefit the most from this trend.

Moving on to the news from the commodity space, crude oil was witnessing buying interest today. Prices rose as market participants tracked the rebound in global share markets.

Gains were also seen after US oil producers in the Gulf of Mexico cut more than half their output in the face of a tropical storm and as tensions continued in the Middle East.

During the week, crude oil prices traded higher after an industry group reported that US stockpiles fell for a fourth week in a row and on tensions around Iran and OPEC's extended cuts.

The market has been concerned that Russia wouldn't fully comply with the extended cuts.

Also, in other news for crude oil, it was reported that India's crude oil production in May year fell 7% to 2,800 thousand metric tonne (TMT) due to fall in production from fields operated by Oil and Natural Gas Corporation (ONGC), Oil India, and private operators.

The fall in domestic crude oil production pushed the country's crude oil import dependence to 85% in the month as compared to 83.8% recorded in the corresponding month a year ago.

As per the data, cumulatively, domestic crude oil production decreased 7% to 5,519 TMT during the first two months (April-May) of the current financial year (2019-2020), as compared to the corresponding period a year ago.

Note that rising crude oil prices coupled with decreasing production has a big impact on the Indian economy as it imports most 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.

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

To know more on crude oil, you can read one of Vijay Bhambwani's recent articles: Is OPEC Dying?

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


Indian Indices Trade Rangebound; Sun Pharma & Tata Steel Top Gainers
12:30 pm

Share markets in India are presently trading on a flat note ahead of June CPI inflation and factory data due later today.

Sectoral indices are trading mixed with stocks in the metal sector and realty sector witnessing buying interest while telecom stocks and capital goods stocks are witnessing selling pressure.

The BSE Sensex is trading down by 15 points, while the NSE Nifty is trading down by 2 points. The BSE Mid Cap index is trading up by 0.5% and the BSE Small Cap index is trading up by 0.4%.

The rupee is trading at Rs 68.56 against the US$.

Market participants are tracking Infosys share price, IndusInd Bank share price, and TRF share price as these companies are set to announce their Q1FY20 results later today.

In news from the textiles sector, KPR Mill share price is witnessing selling pressure today after the company withdrew its buyback proposal due to the tax proposed on buyback obligations in Budget 2019.

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The Secret Behind the Mind Numbing Success of Wipro, MRF and Titan

Wipro, MRF, and Titan are all well-known Indian companies from very different sectors.

But there is something about these companies that makes them very similar as well…

And we are not talking about the fact that they made their investors very rich.

We are going one step back…

You see, these companies share THREE UNIQUE TRAITS that are the true reason behind their massive success.

The reason why they converted ordinary investors into Crorepatis.

And we believe that looking for these same three unique traits in companies could help identify the next Wipro or MRF or Titan.

We know even the thought of finding such a company is extremely exciting.

Now, what if we told you, that you could find details of one such company right now?

Yes, after years of research, we are ready to reveal details of a company that shares the same unique traits as Wipro, MRF and Titan…

Now we know you are very interested…

Just click here to read all about these unique traits and the stock…
------------------------------

Shares of the company dipped around 6% in early trade today on back of the above news.

On April 18, 2019, the company had proposed and approved buyback of 3.8 million equity shares, representing 5.2% of the total share capital, at a price of Rs 702 per share for a consideration not exceeding Rs 2633.1 million.

In a press release, the company said, "we have today filed with markets regulator our communication conveying that the increase in the amount of buyback obligation due to the tax proposal in the Finance Bill 2019 was neither contemplated nor prevailing at the time of the consideration and the approvals of the board and shareholders".

Ankit Shah, in his premium newsletter Insider, has explained how Union Budget 2019 spells bad news for buyback traders. You can read it here.

Last week, Finance Minister Nirmala Sitharaman proposed an additional tax of 20% in case of buyback with a view to discourage the practice of avoiding dividend distribution tax (DDT).

Note that the post-budget reaction saw a negative reaction from the market.

There was also debate around the tax for the super-rich which was increased. Also, for the market, buybacks will now be taxable which was also a surprise.

Before any for or against argument against the tax, it is important to understand how government earns its revenue.

Is this Budget A Step Towards India's March to the Rs 5 Trillion Mark?

Is this Budget A Step Towards India's March to the Rs 5 Trillion Mark

As can be seen in the chart above, corporate taxes contribute the major chunk to India's revenues. This is followed by borrowings and GST.

Non-tax revenues currently contribute to 9% of overall revenues. Non-tax revenues include dividends that the government receives from PSUs or any other divestment that it does.

Girish Shetty shares some of his thoughts on this topic in the recent edition of The 5 Minute WrapUp. Here's an excerpt from what he wrote...

  • Focus on economic growth will mean revenue from corporate taxes will be an automatic by-product.

    The modi government has reduced corporate tax rates to 25% for firms with turnover up to Rs 4 billion.

    We believe many such measures are needed for India to become a Rs 5 trillion economy in the next 5 years.

Moving on to news from the IT sector, Tech Mahindra has entered into a strategic partnership with Rackspace, which will enable cross-selling to company's customer base, joint product and services offerings, and improvements to Rackspace's internal business applications and processes.

With this partnership, Rackspace will execute a new go-to-market commercial model and benefit from improvements and efficiencies to the management of business applications and processes.

To know more about the company, you can read Tech Mahindra's 2018-19 Annual report analysis on our website.

Meanwhile, Quess Corp has received an approval to issue 7,54,437 equity shares of the company having a face value of Rs 10 per equity share to Amazon NV Investment Holdings LLC, a category III Foreign Portfolio Investor, for an aggregate amount of Rs 510 million at an issue price of Rs 676 by way of a preferential allotment.

The Board of the company in its meeting held today has approved the same.

In relation to the proposed investment in the company, the Board has also approved the execution by the company of the Share Subscription Agreement (SSA) for the proposed issue of equity shares on a preferential basis and the investment agreement with Amazon and Qdigi Services, a wholly owned subsidiary of the company.

Tech Mahindra share price and Quess Corp share price are presently trading up by 0.3% and 9.7%, respectively.

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


Indian Stock Markets Open Flat; Telecom and Metal Stocks Lag
09:30 am

Asian share markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is flat while the Hang Seng is up 0.4%. The Shanghai Composite is trading up by 0.5%. The Dow and S&P 500 rose on Thursday to close at record highs as health insurers gained after the Trump administration scrapped a plan designed to rein in prescription drug prices, while financial shares climbed with bond yields.

Back home, India share markets opened the day on a flat note. The BSE Sensex is trading up by 28 points while the NSE Nifty is trading down by 2 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.1%.

Sectoral indices have opened the day on a mixed note with power stocks and oil & gas stocks leading the pack of gainers. Telecom stocks and metal stocks have opened the day in red.

The rupee is currently trading at 68.52 against the US$.

The rupee darted up 14 paise to finish at 68.44 against the US dollar July 11 after dovish comments by US Federal Reserve chair Jerome Powell boosted emerging market currencies.

--- Advertisement ---
The Secret Behind the Mind Numbing Success of Wipro, MRF and Titan

Wipro, MRF, and Titan are all well-known Indian companies from very different sectors.

But there is something about these companies that makes them very similar as well…

And we are not talking about the fact that they made their investors very rich.

We are going one step back…

You see, these companies share THREE UNIQUE TRAITS that are the true reason behind their massive success.

The reason why they converted ordinary investors into Crorepatis.

And we believe that looking for these same three unique traits in companies could help identify the next Wipro or MRF or Titan.

We know even the thought of finding such a company is extremely exciting.

Now, what if we told you, that you could find details of one such company right now?

Yes, after years of research, we are ready to reveal details of a company that shares the same unique traits as Wipro, MRF and Titan…

Now we know you are very interested…

Just click here to read all about these unique traits and the stock…
------------------------------

However, firming oil prices capped the gains, the reports noted.

At the interbank foreign exchange market, the local unit opened on a firm footing at 68.31 and shuttled between a high of 68.30 and a low of 68.48 during the day.

The rupee finally closed at 68.44, down 14 paise over its previous close.

The rupee had declined by 7 paise to close at 68.58 against the greenback Wednesday, pressured by persistent foreign fund outflows and firming crude oil prices.

World stocks rose, and emerging market currencies appreciated after US Federal Reserve Chairman Jerome Powell told a Congressional committee that the central bank is ready to "act as appropriate" to boost growth amid multiple headwinds, bolstering hopes of a rate cut as early as this month.

The dollar index, which gauges the greenback's strength against a basket of six currencies, dropped 0.2% to 96.87.

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 trader's 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 economy. In the Union Budget 2019, affordable housing got a further fillip with an increase in Income Tax deduction of Rs 1.5 lakh on home loans.

Finance Minister Nirmala Sitharaman said the interest paid on housing loans is currently allowed as a deduction to the extent of Rs 2 lakh under Section 24.

To provide further impetus to affordable housing, an additional deduction of Rs 1.5 lakh will be given on interest paid on loans borrowed up to 31 March 2020 for purchase of house up to Rs 45 lakh.

Therefore, a person purchasing an affordable house will now get an enhanced interest deduction up to Rs 3.5 lakh. This will translate into a benefit of around Rs 7 lakh to the middle-class home-buyers over their loan period of 15 years, Sitharaman had said.

The government has proposed to insert a new section 80EEA in the Act so as to provide a deduction Rs 1.50 lakh additional income tax deductions on loan taken for residential house/property up to Rs 45 lakh from any financial institution.

To align the definition of affordable housing under the Income Tax Act with GST Acts, Sitharaman had proposed to increase the limit of carpet area from 30 square metre to 60 square metre in metropolitan regions and from 60 square metre to 90 square metre in non-metropolitan areas.

The cost of the affordable house has been fixed at Rs 45 lakh and below.

Note that, the real estate sector in India has been facing a lot of obstacles lately.

Due to all the headwinds, the number of developers has reduced, and this has created consolidation in the market.

The chart below shows a sharp decline in the number of developers in major Indian cities.

Supply-Side Consolidation in the Real Estate Industry

Supply-Side Consolidation in the Real Estate Industry

Typically, such a reduction in investment in an industry, i.e. contraction of supply, paves the way for a recovery of profits.

From a supply perspective, the competitive intensity has reduced due to leveraged balance sheets of many developers.

This, in turn, has resulted in subdued launches and stalling of existing projects, thus overall reducing inventory and consolidation in the sector.

With this, the share of organised market players is expected to go up in the medium to long term.

This is a huge opportunity for long term serious players in the sector.

Research analyst, Sarvajeet Bodas talks about how Modi's push towards affordable housing can revive the real estate sector and accelerate the economic activity in the video below.

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


Infosys Q1FY20 Result in Focus; Global Stock Market Drivers and Top Stocks in Action
Pre-Open

The Indian share markets snapped selling spree at D-Street on Thursday as possible interest rate cuts by the United States' Federal Reserve lifted sentiments across the Asian markets.

The BSE Sensex settled 266 points higher at 38,823 levels. Hero Moto Corp, IndusInd Bank, Tata Motors, and Vedanta were the top gainers on the 30-share index while Tech Mahindra, ICICI Bank and Axis Bank were the top laggards. The broader Nifty50 too settled 84 points higher at 11,583 levels.

Top Stocks in Focus

Aurobindo Pharma share price will be in focus as it has launched Cinacalcet Hydrochloride Tablets (30mg, 60mg and 90mg) at risk in the US market in accordance with the terms of settlement agreement with Amgen Inc.

Meanwhile, Torrent Pharmaceuticals has informed that the company and Glenmark Pharmaceuticals have signed licensing agreement for co-marketing of Remogliflozin Etabonate in India.

Bank of Baroda is planning to launch an online marketplace for its customers offering banking services and farm-related products. The bank has invited bids seeking a partner to supply 'digital commerce platform' to provide assistance to merchants on catalog management, purchase management fulfilment, pricing, promotion and other similar services.

Infosys will announce results for the first quarter ended 30 June 2019 today. The stock will be in focus.

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

--- Advertisement ---
The Secret Behind the Mind Numbing Success of Wipro, MRF and Titan

Wipro, MRF, and Titan are all well-known Indian companies from very different sectors.

But there is something about these companies that makes them very similar as well…

And we are not talking about the fact that they made their investors very rich.

We are going one step back…

You see, these companies share THREE UNIQUE TRAITS that are the true reason behind their massive success.

The reason why they converted ordinary investors into Crorepatis.

And we believe that looking for these same three unique traits in companies could help identify the next Wipro or MRF or Titan.

We know even the thought of finding such a company is extremely exciting.

Now, what if we told you, that you could find details of one such company right now?

Yes, after years of research, we are ready to reveal details of a company that shares the same unique traits as Wipro, MRF and Titan…

Now we know you are very interested…

Just click here to read all about these unique traits and the stock…
------------------------------

Global Stock Market Drivers

European equities climbed alongside US futures and Asian stocks as investors cheered fresh signs from central bankers that rates are headed lower.

US futures climbed after the S&P 500 briefly topped 3,000 for the first time Wednesday on signals that Federal Reserve Chairman Jerome Powell is willing to lower rates, citing a slowing global economy and trade issues.

Shares rose across most of Asia with the South Korean and Hong Kong markets outperforming and stocks in China edging higher.

Market participants will be eyeing ECB minutes and Powell's testimony before the Senate Banking Committee for further clues.

Here are some key events coming up:

  • Powell testifies to Senate Banking Committee.
  • ECB minutes will be in focus.
  • A key measure of US inflation, the core consumer price index is due.
  • US producer prices are also due today.

Oil Prices Rise

Oil futures hit a six-week high on Thursday as a storm built in the Gulf of Mexico, threatening crude output, while an incident with a British tanker in the Middle East highlighted ongoing tensions in the region.

US West Texas Intermediate (WTI) crude futures were up 0.6%, at US$60.77 a barrel, after earlier touching the highest since May 23 at US$60.83. They gained 4.5% in the previous session.

Brent crude futures reversed early losses and were up 0.5%, at US$67.31 a barrel, after rising to as high as US$67.38, the highest since May 30. They ended Wednesday up 4.4%.

Five boats believed to belong to Iranian Revolutionary Guards approached a British oil tanker on Wednesday and asked it to stop in Iranian waters close by but withdrew after a British warship warned them over radio, a US defence official said on Thursday.

Tensions have been high in the Middle East after attacks on tankers and the downing of a US drone by Iran last month, following President Donald Trump's unilateral withdrawal from a multi-party agreement with Tehran to end its nuclear programme.