Sensex Ends 289 Points Lower; Metal and Energy Stocks Witness Huge Selling
Closing

After opening the day in green, share markets in India witnessed negative trading activity during closing hours and ended lower.

Barring telecom sector and IT sector, all sectoral indices ended on a negative note with stocks in the metal sector, automobile sector and energy sector, leading the losses.

At the closing bell, the BSE Sensex stood lower by 289 points (down 0.8%) and the NSE Nifty closed down by 104 points (down 0.9%). The BSE Mid Cap index ended the day down 1.6%, while the BSE Small Cap index ended the day down by 2.1%.

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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 stood higher by 0.4%.

Speaking of the bearish mood in Indian share markets, master trader Vijay Bhambwani talks to us about stocks, gold, silver, interest rates, crude oil, and how this bear market will come to an end.

investor-hour

Also, the ongoing correction shows the impact of foreign investors (FPI) on the Indian share market.

FPIs have pulled out around Rs 123 billion till date in July.

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The reasons for this are many.

From slowdown in the economy to the Budget...

But, can the real reason be external?

In March this year, the Morgan Stanley Capital International (MSCI) announced it would increase the weightage of Chinese A shares (stocks trading in mainland China) by 4 times. These shares form around 10% of total Chinese shares in the index.

FPIs investing in passive funds follow the MSCI EM index for investments in emerging markets.

A comparison of India's weightage with China in the MSCI EM index provides us clues on the recent outflows from FPIs.

Will India be the Next Hot FPI Destination?

Will India be the Next Hot FPI Destination?

It also explains the announcement to reduce promoter shareholding in the budget.

Will we see a similar FPI inflow into Indian stocks?

Looking at the recent inflow into the Chinese stock markets, it seems very likely.

Market participants were tracking Axis Bank share price, Hero MotoCorp share price, and Tech Mahindra share price as these companies announced their June quarter (Q1FY20) results today.

You can read our recently released Q1FY20 results: Force Motors, Maruti Suzuki, Vedanta, Tata Motors, Supreme Industries.

In the news from the banking space, Bank of India share price was in focus today as the lender reported more than two-fold jump in its net profit to Rs 2.4 billion in the first quarter ended June 30.

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Total income of the bank rose to Rs 115.2 billion during the quarter, as against Rs 106.3 billion in the same period preceding fiscal.

The bank saw slight improvement in its gross non-performing assets (NPAs) to 16.5% of the gross advances as on June 30, 2019. This was down from 16.7% by end of June 2018. Net NPAs or bad loans came down substantially to 5.79% as against 8.45%.

In absolute terms, the bank's gross NPAs stood at Rs 620.6 billion by end of June quarter this fiscal, as against Rs 606 billion as on June 30, 2018.

However, its provisioning and contingencies for the quarter increased to Rs 92.5 billion from Rs 87.6 billion a year ago.

In the news from the commodity space, crude oil witnessed buying interest today. Most of the gains were seen on the back of positive global cues.

Also, expectations that the US Federal Reserve will cut interest rates meant the commodity trade on a positive note.

Note that crude oil has been witnessing volatility lately amid weekly declines in US inventories and rising geopolitical tensions between Iran and other countries.

Meanwhile, volatility was also seen on the back of ongoing geopolitical tensions in the Middle East.

Iran said that a small oil products tanker missing in the Strait of Hormuz was in its territorial waters. This stoked fraught relations with Iran's neighbors and the West over threats to shipping in the key oil chokepoint.

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

Speaking of crude oil, in the video below, Vijay Bhambwani explains how trading in crude oil is an evergreen strategy. As per him, trading in crude oil offers excellent opportunities in nearly all market conditions due to its unique standing within the world's economic and political systems.

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


Indian Indices Erase Gains; Hero MotoCorp Slips 3% ahead of Q1FY20 Results
12:30 pm

Share markets in India have erased their early morning gains and are presently trading on a flat note.

Sectoral indices are trading on a mixed note with stocks in the metal sector, automobile sector and realty sector witnessing selling pressure, while healthcare stocks are trading in green.

The BSE Sensex is trading up by 33 points, while the NSE Nifty is trading up by 10 points. The BSE Mid Cap index and the BSE Small Cap index are trading down by 0.5 and 0.9%, respectively.

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Speaking of the bearish mood in Indian share markets, master trader Vijay Bhambwani talks to us about stocks, gold, silver, interest rates, crude oil, and how this bear market will come to an end.

investor-hour


Market participants are tracking Axis Bank share price, Hero MotoCorp share price, and Tech Mahindra share price as these companies are set to announce their June quarter (Q1FY20) results later today.

You can read our recently released Q1FY20 results: Force Motors, Maruti Suzuki, Vedanta, Tata Motors, Supreme Industries.

In news from the realty sector, country's largest real estate developer by market value, DLF on Monday reported over two-fold jump in its net profit at Rs 4140 million. Net profit in the year-ago period stood at Rs 1724.4 million.

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The real estate firm's total income declined 7% to Rs 15,409.5 million during the same period from Rs 16,576.7 million in the corresponding quarter of the previous year.

The company reported an exceptional income of Rs 2,965.1 million, which helped in a significant rise in its net profit. The company's net sales bookings stood at Rs 7050 million in the June quarter.

In a press release, the company said "DLF's promoters infused the last tranche of funds of around Rs 22,500 million into the company in the June quarter. With a total infusion of Rs 1,12,500 million, this is one of the largest infusions by promoters in an Indian company."

In December 2017, the promoters had infused Rs 90,000 million into the company and promised to invest an additional Rs 22,500 million. The fund infusion was made after the promoters sold their entire stake in DLF's rental arm DLF Cyber City Developers Ltd for Rs 1,19,000 million.

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The company is also planning to develop 17 million square feet of space in commercial and residential segments.

DLF share price is presently trading down by 1.5%.

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 organized 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.

Moving on, shares of Coffee Day Enterprises hit a lower circuit limit of 20% in early trade today on reports that founder VG Siddhartha has been missing since Monday night.

As per an article in The Economic Times, Siddhartha left in his Innova car towards Mangaluru last night, stopped midway at Ullal bridge, and went missing thereafter. The founder has not been reachable since then.

The circumstances in which he went missing has set off suspicions that he may have taken the extreme step for reasons that are not in the public domain.

Here's an excerpt from the article:

  • In an alleged letter, circulating in social media platforms, Siddhartha told the company board on July 27 that his intension was never to cheat or mislead anybody. "I have failed as an entrepreneur. This is my sincere submission. I hope someday you will understand, forgive and pardon me."

    There are reports doing the rounds that Siddhartha jumped off a bridge in Ullal. Times of India reported that Mangaluru city police has started granitic search for a person who reportedly jumped off the kilometer-long bridge over the Netravali river at around 9 pm, about 6 km from Mangaluru.

In response, the company issued an update, acknowledging that Siddhartha is missing. It wrote to the exchanges saying "we are taking the help of concerned authorities. Company is professionally managed and led by competent leadership team, which will ensure continuity of business."

As per the alleged letter, Siddhartha wrote that he could not take any more pressure from one of the private equity partners forcing him to buy back shares, a transaction he partially completed six month ago by borrowing a large sum of money from a friend.

The letter also stated that there was a lot of harassment from the previous DG income tax in the form of attaching company's shares on two separate occasions to block out Mindtree deal.

Sical Logistics share price also hit a lower circuit of 20% as Siddhartha holds 0.68% stake in the company. He holds 32.75% stake in Coffee Day Enterprises, out of which he has pledged nearly 71.40%.

Stay tuned for more updates from this space.

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


Sensex Opens in Green; Banking and Pharma Stocks Lead
09:30 am

Asian share markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.7% while the Hang Seng is up 0.5%. The Shanghai Composite is trading up by 0.6%. US stocks stepped back from peak levels on Monday as investors took a breather as they anticipated a US Federal Reserve interest rate cut this week and looked for signs of progress from US-China trade negotiations, currently under way in Shanghai.

Back home, India share markets opened the day on a higher note. The BSE Sensex is trading up by 155 points while the NSE Nifty is trading up by 38 points. Both, the BSE Mid Cap index and BSE Small Cap index opened on a flat note.

Barring IT stocks, all sectoral indices have opened the day on a positive note with bank stocks, metal stocks and capital goods stocks witnessing maximum buying interest.

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Speaking of the bearish mood of the markets, master trader Vijay Bhambwani talks to us about stocks, gold, silver, interest rates, crude oil, and how this bear market will come to an end.

investor-hour

The rupee is currently trading at 68.78 against the US$.

The Indian rupee today morning was little changed against the US dollar as traders exercised caution ahead of the resumption of US-China trade talks and the outcome of Federal Reserve's policy review meeting this week.

Having opened at 68.75 a dollar, the Indian unit was traded at 68.72, in early deals, up 0.02% from its previous close of 68.73.

The yield on the 10-year government bond was at 6.419% compared with Monday's close of 6.412%.

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The US Federal Reserve will meet on 30-31 July to review monetary policy and is widely expected to cut interest rates by a quarter percentage point.

The rupee has risen 0.9% against the greenback in the year so far.

The dollar index, which measures the US currency's strength against a basket of major currencies, was at 98.097, down 0.1% from its previous close of 98.044.

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?

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Moving on to the news from the pharma sector. Dr Reddy's Laboratories on June 29 reported a net profit of Rs 6.6 billion in the quarter-ended June 31, a jump of 45% year-on-year basis, led by a one-time gain.

The net profit increase is due to a one-off receipt of Rs 3.5 billion from Celgene, pursuant to settlement agreement related to Revlimid brand capsules in Canada.

Revenues grew 3% YoY at Rs 38.4 billion.

Global generics revenue, which contributed little over 80% to total income, grew 8% to Rs 33 billion.

North America, which is largely the US generics business, grew 3% at Rs 16.3 billion.

The company said growth was led by contribution from new products and increase in volumes but was partly offset by price erosion and adverse foreign exchange movement.

The company launched five new products Daptomycin, Testosterone gel, Tobramycin, Vitamin K and OTC calcium carbonate, and re-launched lsotretinoin during the quarter under review.

Revenue from emerging markets grew 10% to Rs 7.3 billion, with much of that accruing from Russia (5%).

India business grew 15% to Rs 7 billion driven by volume traction and improved realisations in base business and new product launches.

Sales from Europe rose 19% to Rs 2.4 billion primarily on account of new products and volume traction due to improvement in supplies.

Pharmaceutical Services and Active Ingredients (PSAI) revenues dropped 16% to Rs 4.5 billion due to decline in sales volume of certain products.

Sales in its proprietary products division fell 61% to Rs 0.3 billion as the company divested its key derma products.

Meanwhile, the company on Monday elevated Erez Israeli as its chief executive officer.

Israeli will report to GV Prasad, who has been re-designated from CEO to co-chairman and managing director of the the drug maker

The appointment will be effective from August 1.

Dr. Reddy's Lab share price opened down by 1.3%.

Here's an interesting data on Dr. Reddy's Lab, investing just Rs 100,000 in Dr. Reddy's Labs in 1992, it would have given a whopping Rs 4.89 crores in 2014!

Profit Opportunities in the Rebirth of India

Profit Opportunities in the Rebirth of India

Co-head of Research, Tanushree Banerjee believes, the opportunities in the Rebirth of India are not only more profitable than the ones in 1991 but the gains could come faster too.

Tanushree has explained this historic opportunity in detail at the Rebirth of India summit.

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


June Quarter Results, Huge Selling by FPIs, and Top Cues in Focus Today
Pre-Open

India share markets ended their day on a negative note yesterday.

At the closing bell yesterday, the BSE Sensex stood lower by 196 points (down 0.5%) and the NSE Nifty closed down by 92 points (down 0.8%).

The BSE Mid Cap index ended the day down 0.7%, while the BSE Small Cap index ended the day down 1%.

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

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Top Stocks in Focus Today

Shares of automobile companies will be in focus today on reports state that the government has proposed an increase in vehicle registration fees. The Road Transport and Highways Ministry has proposed in a draft policy that buyers would not have to pay registration fees for new vehicles if they present a scrapping certificate.

Stocks from the automobile sector witnessed sharp selling pressure yesterday with Maruti Suzuki share price, Hero MotoCorp share price, Bajaj Auto share price, and Ashok Leyland share price, hitting their respective 52-week lows on weak demand and regulatory headwinds.

Last week on Friday, the government proposed amendments to Motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.

In a draft notification, the government proposed renewal of fitness certificates for vehicles older than 15 years every six months instead of the current timeframe of one year.

Market participants will be tracking Castrol India share price, DLF share price, and Tata Sponge share price as these companies announced their June quarter (Q1FY20) yesterday.

You can read our recently released Q1FY20 results here: Force Motors, Maruti Suzuki, Vedanta, Tata Motors.

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FPIs Sell Rs 143.8 Billion Worth of Equities in July

In the news from the macroeconomic space, reversing their five-month buying trend, overseas investors have pressed the exit button in July and pulled out a net Rs 37.6 billion from the Indian capital markets. The sell-off is because multiple headwinds, including the super-rich tax announced in Budget 2019-20.

As per the latest depositories data, foreign portfolio investors (FPIs) pulled out a net sum of Rs 143.8 billion from equities during July 1-26, but invested Rs 106.2 billion in the debt segment, taking the total net outflow to Rs 37.6 billion.

Prior to this, FPIs infused a net Rs 103.8 billion in June, Rs 90.3 billion in May, Rs 160.9 billion in April, Rs 459.8 billion in March and Rs 111.8 billion in February into the Indian capital markets (both equity and debt).

In addition, sub-par monsoon in key areas, lackluster earnings season, slowing domestic growth and weak rupee added to the concerns of FPIs, the reports noted.

On the other hand, inflow in debt markets was witnessed amidst re-emergence of growth concerns globally, due to which central banks around the world softened their monetary policy stance.

The recent fall shows the impact of foreign investors (FPI) on the Indian share market.

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June Quarter Results

ICICI Bank reported a standalone net profit of Rs 19.1 billion during the quarter ended June 2019.

The private lender had posted a loss of Rs 1.2 billion during the corresponding quarter last fiscal, and a profit of Rs 9.7 billion during the March quarter of last fiscal.

In consolidated terms, the profit after tax was Rs 25.1 billion in Q1FY20, as compared to Rs 5 million in Q1 FY19.

The ICICI Bank registered net interest income (NII) of Rs 77.4 billion during the June quarter of FY20, amounting to a year-on-year increase of 27% from Rs 61 billion.

The net interest margin was 3.6% in Q1-2020 compared to 3.2% in Q1-2019 and 3.7% in Q4-2019. The impact of interest on income tax refund and interest collection from NPLs on net interest margin was about 17 basis points in Q1-2020 compared to about 25 basis points in Q4-2019.

The non-interest income of ICICI Bank, excluding treasury income, was Rs 32.5 billion in Q1 FY20, as compared to Rs 30.9 billion in Q1 FY19. Meanwhile, provisions and contingencies slipped down to Rs 34.9 billion during the quarter under review, as compared to Rs 59.7 billion during the corresponding quarter last year.

The ICICI Bank also improved its asset quality during the June quarter of FY20. The net NPA decreased by 51% to Rs 118.6 billion as on June 2019, from Rs 241.7 billion the same quarter last fiscal.

The net NPA ratio also slipped down to 1.8% during the quarter ended June 2019, in comparison to 4.2% the same quarter last year. The gross additions to NPA were Rs 27.8 billion in Q1 FY20, as opposed to Rs 40.4 billion in Q1 FY19.

Total deposits increased by 21% year-on-year to Rs 6,607.3 billion in June 2019.

From the pharma space, Alembic Pharma posted a 36.7% year-on-year (YoY) rise in its consolidated net profit for the quarter ended June.

The above performance was driven by robust sales in the US markets.

Net sales were up 10% at Rs 9.4 billion during the quarter.

Pranav Amin, Managing Director of the company said that it was a good quarter for the company backed by exceptional growth in the US market.

Subramanian Swamy Accuses Indiabulls Housing Finance

From the finance sector, BJP leader Subramanian Swamy has sent a letter to PM Modi, accusing Indiabulls Housing Finance of Rs 1 lakh crore fraud.

As per the letter circulating on twitter, Swami accused that the company is heading for a financial collapse and bankruptcy, resulting in large corruption issues in the real estate, banking, stock markets and loss of more than Rs 1 lakh crore of public and of National Housing Bank (NHB).

The letter alleged that Indiabulls created more than 100 shell firms and took loans from NHB. It then re-allotted or siphoned it off to many real estate firms in Maharashtra, Delhi, Gurugram, Bangalore and Chennai in the range of Rs 300 million to Rs 10 billion.

The letter suggested that the company accepted these amounts back as investments from the friendly real estate firms.

Indiabulls acknowledged Swamy's letter being circulating in the social media that alleged embezzlement from NHB. The company told stock exchanges that loans outstanding as on date from NHB to Indiabulls Housing was nil.

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