Sensex Ends 267 Points Lower; Metal and Capital Goods Stocks Witness Huge Selling
Closing

India share markets continued to witness selling pressure during closing hours and ended their day deep in the red.

At the closing bell, the BSE Sensex stood lower by 267 points (down 0.7%) and the NSE Nifty closed down by 98 points (down 0.9%).

The BSE Mid Cap index ended the day down 1.3%, while the BSE Small Cap index ended the day down 1.4%.

Note that the decline in small-cap segment has been sharper since the Union Budget, with the BSE Smallcap index hitting its lowest level since February 2017.

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But Richa Agarwal says this fall currently offers the best bargains to the market.

In the below video, she talks about picking right stocks to benefit from the upcoming rebound.

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

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The rupee was trading at 71.45 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.15% and the Shanghai Composite was trading flat. The Nikkei 225 was down 0.28%.

European markets were trading on a positive note. The FTSE 100 was up by 1.01%. The DAX was trading up by 1.02%, while the CAC 40 was up by 1.42%.

Speaking of stock markets in general, the market is typically focused on the most recent star performers.

You will often find the likes of HUL or HDFC Bank being the market darlings for never having a disappointing quarter.

But it is rare to find companies that thrive through most of their survival period.

Tanushree Banerjee shares few of her thoughts on this. Here's an excerpt of what she wrote in today's edition of The 5 Minute WrapUp...

  • It is rare to find companies that survive for decades. It's even rarer to find ones that thrive through most of their survival period.

    So, if you do not wish to pay steep valuations for the market darlings, you need to look for the companies with history and consistency on their side.

    And they shouldn't be too conspicuous to the market either.

    I am talking of companies like Hawkins and City Union Bank. They have a track record of paying dividends for decades.

    The dividends such companies pay are especially helpful at a time when globally interest rates are headed lower.

And, as seen in the chart below, 'risk-free returns' from debt seem to have gone missing.

Inflation Adjusted Risk Free Returns Are Negligible Globally

Inflation Adjusted Risk Free Returns Are Negligible Globally

In the news from the realty sector, Oberoi Realty share price and Capacite Infraprojects share price were in focus today.

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Shares of the companies witnessed selling pressure after the income Tax (IT) Department carried out searches for suspicious transactions, including alleged purchase from dubious entities.

Capacite Infraprojects is Oberoi Realty group's biggest vendor.

As per the news, clarification has been sought by stock exchanges on the development and the companies are yet to respond.

As per the report, there was suspicion on related party transaction within Oberoi and the IT department also suspects a difference between the sale price of housing units shown on the books and the registered prices.

The report added that since Oberoi Realty deals in the luxury home segment, the department suspects benami transactions by flat buyers to hide their identities.

Earlier this month, the IT department had conducted searches at Mumbai and Pune-based offices of four other realty firms, including Hub Town, Atul Projects, Wadhwa Group and Radius Developers.

A statement issued by the Press Information Bureau, on the behalf of IT department, said that the searches across more than 40 premises led to recovery of evidence related to receipt of 'On Money' sale of commercial and residential blocks, bogus unsecured loans taken, bogus long-term capital gains and various other sham transactions to evade income aggregating about Rs 7 billion.

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

In the news from the commodity space, crude oil prices witnessed buying interest today.

Prices rose above US$ 60 a barrel for the first time in over a week amid data that showed a larger-than-expected drawdown in US crude inventories.

The American Petroleum Institute (API) reported a crude oil inventory draw of 3.45 million barrels for the week ending August 15, compared to analyst expectations of a 1.889-million barrel draw.

The inventory build this week compares to last week's surprise build of 3.7 million barrels, according to API data.

Oil prices rose on the back of above announcement but ongoing worries about a global economic recession capped gains.

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.

How this all pans out remains to be seen.

To know more about crude oil and the recent developments in this space, you can read Vijay Bhambwani's recent article here: Message of the Markets - What is Crude Oil Indicating?

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


Sensex Trades Marginally Lower; Tata Motors & Yes Bank Slip Over 5%
12:30 pm

Share markets in India are presently trading on a negative note amid weak global cues.

The BSE Sensex is trading down by 136 points (down 0.4%), while the NSE Nifty is trading down by 52 points (down 0.5%). The BSE Mid Cap index and the BSE Small Cap index are trading down by 0.8%.

Sectoral indices are trading in red with stocks in the metal sector, telecom sector and realty sector witnessing maximum selling pressure. Meanwhile, automobile stocks are trading in green amid reports that the government may postpone the hike in registration fees for vehicles.

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The rupee is currently trading at Rs 71.55 against the US$.

In news from the engineering sector, CG Power and Industrial share price is witnessing selling pressure today. Stock of the company plunged as much as 20% to hit an all-time low of Rs 11.80.

The Ministry of Corporate Affairs (MCA) has ordered an inspection into the affairs of the company after reports of financial wrongdoings came into the light.

Yesterday, shares of the company fell 20% after the company in a regulatory filing said that an internal probe uncovered some irregularities in the financial statements of the company.

The filing said, "while working on one of its priority tasks of seeking refinancing of certain facilities and as a part of conducting financial analysis in this regard, the Operations Committee was made aware of some unauthorized transactions by certain employees of the company".

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The probe was triggered after auditors of the power equipment maker resigned a few months ago.

An audit committee of the company flagged off unauthorized transactions by certain employees of the company leading to an understatement of not only the company's liabilities but also advances to related and unrelated parties of the group.

Reports state that the company is planning to conduct a detailed forensic investigation to establish the accountability of wrongdoings and will take requisite legal actions to protect its interest.

CG Power is part of Avantha Group, founded by Gautam Thapar, and has two different segments as power systems and industrial systems.

Thapar demerged the consumer business which became Crompton Greaves Consumer Electricals, and the erstwhile Crompton Greaves became CG Power and Industrial Solutions.

His stake in Crompton Greaves Consumer was sold to private equity funds Advent International and Temasek Holdings for Rs 20 billion in 2015.

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

Moving on to news from the healthcare sector, Alembic Pharma has received no observation from the US Food and Drug Administration (USFDA) for its Vadodara facility.

The facility was inspected between August 12 and August 20 for bioequivalence bioanalytical and bioequivalence clinical. The company was issued Form 483s at the end of the inspection.

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Alembic Pharma share price is presently trading up by 1.6%.

To know more about the company, you can read Alembic Pharma's latest result analysis and Alembic Pharma's 2018-19 annual report analysis on our website.

Meanwhile, Dr Reddy's Laboratories announced that the audit of its formulations manufacturing plant at Duvvada by the USFDA has been completed, and a Form 483 with 8 observations has been issued.

As per the US health regulator, "an FDA Form 483 is issued to firm management at the conclusion of an inspection when an investigator(s) has observed any conditions that in their judgment may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts."

The company has also launched generic anti-epileptic Vigabatrin powder for oral solution in the US market. The product is a generic version of Lundbeck's Sabril powder for oral solution.

Sabril is indicated as adjunctive therapy for adults and pediatric patients of 10 years of age and older with refractory complex partial seizures who have inadequately responded to several alternative treatments and for whom the potential benefits outweigh the risk of vision loss.

According to IMS Health data, Sabril brand and generic had US sales of around US$ 74 million for the most recent twelve months ending in June 2019.

Dr Reddy's Laboratories share price is presently trading down by 2%.

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.


Sensex Opens Flat; Realty and Metal Stocks Lag
09:30 am

Asian share markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.1% while the Hang Seng is flat. The Nikkei 225 is trading down by 0.4%. Meanwhile, Financial shares led US stocks lower on Tuesday to end a three-day rally as investors awaited comments from Federal Reserve Chair Jerome Powell at the end of the week. The S&P 500 financial index dropped 1.4% and the group weighed most heavily on the benchmark index among its major sectors, which all registered losses.

Back home, India share markets opened on a flat note with negative bias. The BSE Sensex is trading down by 45 points while the NSE Nifty is trading down by 20 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.2% and 0.1% respectively.

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

The rupee is currently trading at 71.49 against the US$.

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The Indian rupee on Tuesday furthered its loss by another 28 paise to close at a new six-month low of 71.71 against the US dollar as economic uncertainties continued to weigh.

Market participants remained risk averse considering a host of factors including fast-spreading economic slowdown, outlook on foreign fund outflows and weakness in most emerging market currencies, the reports noted.

Starting off on a weaker note, the rupee fell to a day's low of 71.80 against the US dollar before settling at 71.71 against the US dollar, down 28 paise over the previous close. This is the lowest level for the local unit since February 4, when it closed at 71.80 a dollar.

On Monday, the Indian rupee had settled at 71.43 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.

Vijay Bhambwani, the editor of Weekly Cash Alerts, had pointed out last week that the rupee will fall further.

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

Moving on to the news from the automobiles sector. According to automobile dealers' body, federation of Automobile Dealers Associations (FADA), retail sales of passenger vehicles (PVs) dropped by 11% to 2,43,183 units in July 2019 as compared to 2,74,772 units the same period last year.

The drop in PV sales was mainly on account of weak demand across the country.

Two-wheeler sales declined by 5%, while commercial vehicle sales dropped by 14%. However, three-wheeler sales saw an increase of 3%.

Total sales across categories declined by 6% to 16,54,535 units in July as against 17,59,219 units.

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As per the report, consumer sentiment and overall demand continued to be quite weak across all segments and most geographies. FADA represents over 15,000 automobile dealers who run around 25,000 dealerships across the country.

Reports state that many dealers who have recently entered the auto industry are finding it difficult to manage their repayment obligations. Banking industry experts estimate the total outstanding loans to automobile dealers to be in the range of Rs 700-800 billion.

Note that multiple factors have affected the auto sector of late.

The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms... they have all taken their toll.

However, it is interesting to note that despite the slowdown in the auto sector, the sales volume of electric vehicles (EVs) are growing at a robust pace.

Have a look at the chart below:

Electric Vehicle Sales on a High Growth Trajectory!

Electric Vehicle Sales on a High Growth Trajectory!

Electric-2 wheelers sales volume registered 130% YoY growth in FY19. 4-wheeler EVs grew by 200% YoY.

Similarly, electric three-wheelers reported the highest sales volume of 630,000 units. It is important to note that the electric three-wheeler industry has been growing without government support.

The base is quite low compared to the internal combustion engine (ICE) vehicle sales. However, you cannot ignore the growing momentum in EV sales.

The recently announced government incentives will give a further boost to EV sales.

The coming one year will be a real test for India's auto companies.

It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.

In our view, companies in the sector adapting their business models to the rapidly changing environment will survive and thrive.

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


Indian Indices Witness Volatility, DHFL Saga, and Top Stocks in Focus Today
Pre-Open

India share markets traded on a volatile note yesterday and ended their trading session marginally lower.

At the closing bell yesterday, 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%.

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 Indian rupee witnessed selling pressure against the US dollar yesterday. The domestic unit opened on a weak note and fell 23 paise to 71.66 against the US dollar in early trade.

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

On Monday, the Indian rupee tumbled 29 paise to close at an over six-month low of 71.43 against the US dollar.

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:

Top Stocks in Focus Today

From the pharma sector, Dr. Reddy's Laboratories share price will be in focus today as the company has launched Versavo (bevacizumab), a biosimilar of Roche's Avastin in India, indicated for the treatment of several types of cancers.

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.

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From the banking sector, Yes Bank share price will also be in focus today. Shares of the lender witnessed selling pressure yesterday 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.

Yes Bank, which holds 12.79% stake in CG Power, witnessed huge selling on the back of the above announcement.

From the IT sector, market participants will be tracking Wipro share price as the company 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.

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DHFL Defaults on Obligations Worth Rs 15.7 Billion

In news from the finance sector, Dewan Housing Finance Corporation (DHFL) 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 witnessed huge selling pressure yesterday 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.

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.

On Monday, the stock of the company climbed more than 10% 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.

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

From the IPO Space...

In news from the IPO space, the initial public offering (IPO) of Sterling and Wilson Solar made a weak debut yesterday. 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 both gave handsome double-digit returns on the listing date.

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.