Sensex Ends 74 Points Lower; Metal and Energy Stocks Witness Selling
Closing

India share markets ended their volatile trading session marginally lower today.

At the closing bell, the BSE Sensex stood lower by 74 points (down 0.2%) and the NSE Nifty closed down by 37 points (down 0.3%).

Both, the BSE Mid Cap index and the BSE Small Cap index ended the day down by 0.6%.

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Sectoral indices ended on a mixed note with stocks in the metal sector and energy sector witnessing most of the selling pressure. Stocks from the auto sector and IT sector ended on a positive note.

The rupee was trading at 71.67 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.23% and the Shanghai Composite was down by 0.11%. The Nikkei 225 was up by 0.55%.

European markets were trading on a positive note. The FTSE 100 was up by 0.56%. The DAX was trading up by 0.13%, while the CAC 40 was up by 0.26%.

In the news from the currency markets, the Indian rupee was witnessing selling pressure against the US dollar today. The domestic unit opened on a weak note today and fell 23 paise to 71.66 against the US dollar in early trade.

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Most of the losses today were seen amid rising crude oil prices and persistent foreign fund outflows.

Yesterday, the Indian rupee tumbled 29 paise to close at an over six-month low of 71.43 against the US dollar. Losses here were seen amid growing worries over an economic slump and strengthening of the US dollar vis-a-vis other currencies overseas.

Note that Indian rupee became Asia's worst performing currency this month. For the common man, the falling rupee is going to hit where it hurts the most - the pocket.

In the video below, Vijay Bhambwani explains what's behind the fall in rupee and how much can it fall further:

In the news from the banking sector, Yes Bank share price was in focus today. Shares of the lender witnessed selling pressure after the risk and audit committee of CG Power and Industries said that were some unauthorized transactions carried out by 'certain employees' of the company.

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As per the news, the committee said that the above transactions have led to potential understatement of not only the company's liabilities, but also advances to related and unrelated parties of the company and the group.

Yes Bank, which holds 12.79% stake in CG Power, declined around 6% reacting on the announcement.

Similarly, shares of CG Power tanked nearly 20%.

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

Moving on, in latest developments from the IPO space, the initial public offering (IPO) of Sterling and Wilson Solar made a weak debut today. The stock of the company opened at Rs 700, down 10.25% from its issue price of Rs 780.

The company's Rs 31.3 billion IPO was open for subscription during 6-8th August with a price band of Rs 775-780 a share.

The IPO comprised entirely of an offer for sale (OFS) of 40.3 million shares.

SWSL is an end-to-end solar EPC solutions provider and was the world's largest solar EPC solutions provider in 2018 based on annual installations of utility-scale Photo-voltaic (PV) systems of more than 5 megawatt (MW).

The company provides EPC services primarily for utility-scale solar power projects with a focus on project design and engineering. It also provides operations and maintenance (O&M) services.

The company operates in around 26 countries and is the largest solar EPC solutions provider in each of India, Africa and the Middle East.

As of March 31, the company's order book stood at Rs 77.4 billion, which includes letters of intent worth Rs. 39.1 billion for solar power projects for which it has won the bid but has not yet executed definitive.

Ankit Shah, in his premium newsletter Equitymaster Insider, has shared the detailed note of the company's IPO. You can read more about it and the company here: Sterling and Wilson Solar Ltd IPO: Apply or Avoid?

Speaking of IPOs, the first half of 2019 hasn't seen a lot of activity in the IPO market.

There have been just 8 IPO on the main board, raising as much as Rs 55.1 billion, compared with 24 that raised Rs 309.6 billion in the year earlier period.

Despite lackluster activity in India's primary markets, there have been attractive money-making opportunities for attentive investors.

Ankit Shah recommended applying to the IPO of Polycab India and the IPO of IndiaMART InterMESH.

Both IPOs were subscribed many times over. And as can be seen from the chart below, both gave handsome double-digit returns on the listing date.

Top 3 IPO Gains in 2019

In the Long Run, Elections Don't Influence the Stock Market

At Equitymaster, we believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

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


Sensex Slips 150 Points; Yes Bank & IndusInd Bank Top Losers
12:30 pm

Share markets in India have erased early morning gains and are presently trading marginally lower.

Barring automobile sector and IT sector, all sectoral indices are trading on a negative note with stocks in the metal sector and realty sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 139 points while the NSE Nifty is trading down by 57 points. The BSE Mid Cap index is trading down by 0.9% and the BSE Small Cap index is trading down by 0.7%.

The rupee is trading at 71.64 against the US$.

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In news from the finance sector, Dewan Housing Finance Corporation (DHFL) on Monday said it has defaulted on its financial repayment obligations worth Rs 15.7 billion with regard to issuance of bonds and commercial papers.

Shares of the company slipped over 7% in early trade today on back of the above news.

In a regulatory filing, the company said that the defaults involve three cases regarding interest payment on non-convertible debentures and commercial papers (CPs).

The non-banking financial company (NBFC) said it has defaulted on Rs 469.2 million towards interest amount on secured NCDs (9.92% and 9.40%) issued through a public issue for multiple tenors of amount involving interest of Rs 3,637.7 million and principal amount of Rs 10,599.1 million. Defaults of Rs 1 billion occurred on CPs.

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Note that the beleaguered NBFC has not been able to fulfil its obligations towards debt repayment in the recent past and there have been several cases of defaults on commercial papers and bonds.

Reports state that the company is estimated to be sitting on a debt-pile of over Rs 900 billion.

Yesterday, stock of the company climbed more than 10% in the afternoon session after lenders agreed on a three-level resolution plan that includes conversion of debt to equity and issuance of nonconvertible debentures.

The restructuring plan being worked out by lenders also includes conversion of some loans into non-convertible debentures, instruments that will be long term in nature and give the company some breathing space on repayments.

Mutual funds that have exposure to the company have also written to the markets regulator, seeking permission to sign an inter-creditor agreement (ICA) with lenders to join the resolution process in keeping with the central bank's June restructuring guidelines.

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DHFL share price is presently trading down by 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.

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 one of the editions 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 news from the IT sector, Wipro has entered into a strategic partnership with the Indian Institute of Science (IISc), India's premier public establishment for research and higher education in science and engineering, to conduct advanced applied research in autonomous systems, robotics and 5G space.

Reportedly, the two organizations have jointly set up the Wipro IISc Research and Innovation Network (WIRIN), a hybrid industry academia collaboration unit, which will drive idea discovery, research and innovation in technology and product design.

Meanwhile, Tech Mahindra's corporate social responsibility (CSR) arm - Tech Mahindra Foundation (TMF) has collaborated with the Loomba Foundation, a United Nations (UN) accredited global charity supporting widows and their children.

The collaboration will facilitate employment-oriented skill training for widows and their children in India with focus on Jammu, Kashmir and Ladakh.

TMF will support the training needs of the students selected by the Loomba Foundation at its state-of-the-art academies in digital technologies and healthcare.

Wipro share price is trading up by 0.8%, while Tech Mahindra share price is trading down by 0.6%.

To know more, you can read Wipro's latest result analysis and Tech Mahindra's latest 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.


Sensex Opens Marginally Up; Power and IT Stocks Gain
09:30 am

Asian share markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite and the Hang Seng are up by 0.1%. The Nikkei 225 is trading up by 0.4%. US stocks climbed on Monday as reports of stimulus efforts in China and Germany calmed fears of a severe downturn in the global economy that were stoked last week as bond yields fell.

Back home, India share markets opened on a flat note. The BSE Sensex is trading up by 90 points while the NSE Nifty is trading up by 16 points. Both, the BSE Mid Cap index and BSE Small Cap index opened on a flat note.

Sectoral indices have opened the day on a mixed note with power stocks and information technology stocks witnessing maximum buying interest. Consumer durables stocks and metal stocks have opened the day in red.

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The rupee is currently trading at 71.62 against the US$.

On Monday, the Indian rupee tumbled 29 paise to close at an over six-month low of 71.43 against the US dollar on Monday amid growing worries over an economic slump and sustained foreign fund outflows.

Further, rising crude oil prices and strengthening of the US dollar vis-a-vis other currencies overseas also took toll on the Indian currency.

At the interbank foreign exchange market, the rupee opened on a weak note and fell to a day's low of 71.48 against the US dollar.

The domestic currency finally settled at 71.43 against the US dollar, slipping 29 paise over the previous close. This is the lowest level for the local unit since February 7, when it had closed at 71.45 a dollar.

On Friday, the rupee had settled at 71.14 against the US dollar.

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Indian rupee became Asia's worst performing currency this month. For the common man, the falling rupee is going to hit where it hurts the most-the pocket.

In the video below, Vijay Bhambwani explains what's behind the fall in rupee and how much can it fall further.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Dr. Reddy's Laboratories has launched Versavo (bevacizumab), a biosimilar of Roche's Avastin in India, indicated for the treatment of several types of cancers.

The company's Versavo is available in strengths of 100mg and 400mg single use vials.

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The company now has six biosimilar products commercialized in India and various emerging markets and an active development pipeline of several biosimilar products in the oncology and immunology space.

Speaking of the biosimilars, note that, Biosimilars and Biologics are burgeoning sectors. Also, major scientific and technological advances, coupled with socio-demographic changes and increasing demand for medicines will revive the pharma industry's fortunes in another 10 to 20 years.

But given the complexity of biologics, will Indian companies be able to break some ground in this space? Going forward, whether the monetization of biosimilars prove to be a big growth driver for the company will be the key thing to watch out for.

Dr. Reddy's Lab share price opened up by 1.1%.

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

In the Long Run, Elections Don't Influence the Stock Market

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.


NBFCs in Focus, Rising Crude Oil Prices and Top Stocks in Action Today
Pre-Open

On Monday, Indian share markets witnessed selling pressure during closing hours and ended marginally higher.

The BSE Sensex closed higher by 52 points to end the day at 37,402. Sun Pharma and Tech Mahindra were among the top gainers.

While the broader NSE Nifty ended up by 6 points to end at 11,054.

Among BSE sectoral indices, consumer durable stocks gained the most by 1.6%, followed by capital goods stocks and healthcare stocks.

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Top Stocks in Action Today

Glenmark Pharma share price will be in focus today as the company has received regulatory approval to market a combination of its novel, patent protected and globally researched sodium glucose co-transporter-2 (SGLT2) inhibitor Remogliflozin etabonate (Remogliflozin) and Metformin Hydrochloride (Metformin) film coated tablets in India.

Tata Motors share price will also be in focus today as it has launched offers across its Tiago, Tigor, Hexa and Nexon range sold in India during this monsoon. The package offers free roadside assistance and warranty for 3 years/40,000 Kms.

Market participants will also track Emami share price.

Reportedly, the company is aiming at a 15% revenue growth in the haircare segment in the 2019-20 fiscal. The company's haircare portfolio - Kesh King, Navratna and 7 Oils in One - is worth Rs 12.2 billion and accounts for 25-30% of its topline.

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RBI Rules Out Asset Quality Review for NBFCs

The Reserve Bank of India (RBI) Governor Shaktikanta Das, on Monday, ruled out ordering an asset quality review of non-banking finance companies (NBFCs) that are facing a credit squeeze since the collapse of IL&FS in August last year.

Addressing the press at the sidelines of the annual banking conclave organized by Federation of Indian Chambers of Commerce & Industry (FICCI), Das said "at the moment there is no such proposal to have an asset quality review. Let me also add that 50 odd NBFC's and HFC's are being closely monitored".

Das explained that bringing Housing finance companies (HFCs) under the regulatory ambit of the Reserve Bank is a significant move, given their asset-liability profiles.

Including HFCs, the size of the NBFC sector constitutes about 25% of combined balance sheet of scheduled commercial banks.

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Bank credit to NBFCs fell by over Rs 60 billion between March to June highlighting the risk aversion towards the sector. Credit disbursals by NBFCs plunged by a third in the year to March raising worries over solvency issues.

Governor Das also said that it was the right time to formalize linking of fresh loans with external benchmarks like the repo rate.

The country's largest lender State Bank of India (SBI) recently introduced repo-linked lending rate for home loans from July only for new customers who are getting the direct benefit of lower policy rates.

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

Oil Rises amid Drone Attack

Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemeni separatists and as traders looked for signs that Sino-US trade tensions could ease.

A drone attack by Yemen's Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected.

Gains were however capped to some degree by an unusually downbeat OPEC report that stoked concerns about growth in oil demand.

The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.1 million bpd and indicated the market would be in slight surplus in 2020.

Japan's Exports Slip for Eighth Month

Japan's exports slipped for an eighth month in July, while manufacturers' confidence turned negative for the first time in over six years as China-bound sales slumped again in a fresh sign the Sino-US trade war could tip the economy into recession.

Exports in July fell 1.6% from a year earlier. This marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.

Exports to China, Japan's biggest trading partner, shrank 9.3% YoY in July, down for a fifth month. The contraction was led by sizable declines of 31.5% in semiconductor production equipment, 35% in car parts and 19% in electronics parts.

Export volume rose 1.5% in July year-on-year (YoY), the first positive reading in nine months.

Shipments to Asia, which account for more than half of Japan's overall exports, declined 8.3% in the year to July.

Japan's exports to the United States rose 8.4% in the year to July. The two countries are set to hold ministerial-level trade talks in Washington this week, with eyes on an early trade deal including US beef exports and Japan's auto exports.

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.