Sensex Ends 164 Points Lower; Auto and Telecom Stocks Witness Huge Selling
Closing

India share markets witnessed selling pressure during closing hours and ended their day in the red.

At the closing bell, the BSE Sensex stood lower by 164 points (down 0.4%) and the NSE Nifty closed down by 54 points (down 0.5%).

The BSE Mid Cap index ended the day down 0.2%, while the BSE Small Cap index ended the day up 0.1%.

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

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The rupee was trading at 71.32 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was down by 0.26% and the Shanghai Composite was up by 0.75%. The Nikkei 225 was also up 0.75%.

European markets were also trading on a mixed note. The FTSE 100 was down by 0.05%. The DAX was trading up by 0.04%, while the CAC 40 was down by 0.15%.

In the news from the power sector, as per a leading financial daily, finance and power ministries are in advanced talks to merge smaller power companies with NTPC and NHPC.

The news report said that NTPC or NHPC may takeover smaller power companies such as Tehri Hydro Development Corporation (THDC), SJVN and North Eastern Electric Power Corporation (NEEPCO). THDC is a joint venture between the Centre and UP government.

NTPC share price and NHPC share price were in focus today on the back of above news.

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

In other news, the offer for sale (OFS) for Reliance Nippon Life Asset Management (RNAM) got 24% retail bids while that of SBI Life received 15% institutional bids by noontime today.

SBI Life's institutional quota was subscribed 15% at 47,53,576 shares against the base size of 3,15,00,000 shares.

Moving on to the news from the automobile sector... While Finance minister Nirmala Sitharaman said that millennials preferring taxi aggregators like Ola and Uber could be one of the reasons for the crisis in the auto sector, India's largest carmaker Maruti Suzuki today said that cab aggregators may not be a big factor in the slowdown.

Maruti Suzuki India's Executive Director Shashank Srivastava told news agency that the ownership pattern in India still has not changed and people purchase cars with an "aspirational aspect". The Ola and Uber factor may not be strong to contribute to the current state of slowdown, he said.

The Maruti executive said the auto sector saw one of its best times during the surge of Ola and Uber and other cab aggregators. He said that Ola and Uber came into existence during last 6-7 years and in this period, the auto industry also saw some of its best times.

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This comment came in contrast with the comment made by Finance Minister Nirmala Sitharaman yesterday where she said the slowdown in the automobile sector was due to many factors like the change in mindset of millennials, who now prefer taxi aggregators like OLA and UBER instead of committing for monthly installments to own a car.

Srivastava further cited the US market which has seen robust auto sector in spite of Uber which is a big player there. He noted that in India, 46% of the car buyers are first time users. It is an aspirational behaviour. People may use public transport like Ola and Uber to go to offices on weekdays, but still they buy a vehicle for the weekend outings with the family, he said.

Note that the Finance Minister yesterday said that the auto sector had been affected by several things and the government is all seized of the problem and will try to solve it.

On August 23, in a bid to address the slowdown in the auto sector, Sitharaman had announced lifting the ban on purchase of vehicles by government departments and allowed an additional 15% depreciation on vehicles acquired from now till March 2020.

Also, the government clarified that BS-IV vehicles purchased up to March 2020 would remain operational for the entire period of registration, while also considering various measures, including scrappage policy to boost demand.

How these decisions pan out in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

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.

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Automobile sales have fallen every month for almost a year now, except for October when the numbers were flat. In June, nine out of India's 11 main passenger vehicle makers reported a double-digit decline in sales.

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.

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-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.


Sensex Trades Marginally Higher; ICICI Bank & HDFC Top Gainers
12:30 pm

Share markets in India are presently trading on a positive note, tracking gains in global peers amid signs of a slowdown in US-China trade war. US President Donald Trump on Wednesday delayed an additional increase in tariffs on Chinese goods by two weeks.

The BSE Sensex is trading up by 57 points while the NSE Nifty is trading up by 14 points. The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.6%.

Sectoral indices are trading mixed with stocks in the automobile sector and IT sector witnessing selling pressure, while finance stocks and banking stocks are witnessing buying interest.

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The rupee is currently trading at 71.29 against the US$.

Speaking of Indian stock markets, if you look at the returns over the years, you will see that the markets have never moved in a linear fashion.

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.

The Time to Buy Stocks is Now

The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

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The real question is - Are you taking advantage of these price declines to buy quality stocks?

In news from the pharma space, Strides Pharma Science on Wednesday announced that it has acquired 70% stake in Switzerland-based Fairmed Healthcare AG for Rs 158.6 million. The acquisition was made through its subsidiary Strides Pharma Global Pte Ltd.

The company in a statement said "Fairmed has built a strong franchise of supplying high-quality Rx and OTC products in key European markets and the acquisition will augment Strides' footprint in continental Europe with a direct presence in the German speaking markets of Germany, Austria and Switzerland collectively called as DACH region."

After acquisition, the business will have access to Strides' already approved product portfolio for the markets Fairmed operates in with supplies from several of its EU approved facilities.

Last month, Strides, through its US-based subsidiary had acquired the soft gel capsule manufacturing facility of Micelle BioPharma in Florida for US$ 500,000.

Strides Pharma Science share price is presently trading down by 0.3%.

Meanwhile, the US Food and Drug Administration (USFDA) has issued an Establishment Inspection Report (EIR) for Alkem Laboratories' manufacturing facility located at St. Louis, Fenton Logistics Park, USA which was inspected from August 16, 2019 to August 22, 2019.

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The company received a Form 483 issued by the USFDA containing four observations.

Alkem Laboratories share price is presently trading down by 0.2%.

Moving on to news from the engineering sector, Walchandnagar share price is witnessing buying interest today after the company bagged a contract from Indian Space Research Organization (ISRO).

The company in its BSE filing said it secured an order worth Rs 772 million plus escalation from the Vikram Sarabhai Space Centre of ISRO located at Thiruvananthapuram.

Shares of the company are locked in 20% upper circuit on back of the above news.

The order is towards manufacturing and supply of head, middle and nozzle end segments (total 30 numbers) for the GSLV M KIII launch vehicle, it added.

The company's Managing Director & CEO said it is the company's second largest single order from ISRO and the largest as far as the GSLV-M KIII launch vehicle is concerned.

Note that the company has been a strategic partner to ISRO since the 1970s and has supplied critical launch vehicle hardware for all its programs (SLV, ASLV, PSLV, GSLV, and GSLV-M Klll) including the latest Chandrayaan-2 mission.

Meanwhile, Larsen & Toubro (L&T) said its Oman arm has won a "significant" contract in Muscat to build a hotel and residences. Reports state that the contract is in the range of Rs 10 billion to Rs 25 billion.

The company in a statement said, "the buildings and factories business of L&T Oman has been awarded the main work contract of The Mandarin Oriental, Muscat by Eagle Hills, Muscat. The project involves the construction of the Mandarin Oriental Hotel Muscat and the residences at the Mandarin Oriental, Muscat."

L&T will oversee the overall construction within the site, which includes a 150-key hotel and 156 units of branded residences, as well as 1,622 square meters of retail areas, podium and basement.

The statement said the business has also secured an add-on order to construct a residential tower for a leading developer in Hyderabad.

L&T share price is presently trading up by 0.1%.

To know more, you can read L&T's latest result analysis and L&T's 2018-19 annual report 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 Over 140 Points Up; Metal and Energy Stocks Lead
09:30 am

Asian share markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.3% while the Hang Seng is up 0.2%. The Nikkei 225 is trading up by 0.9%. Wall Street moved higher on Wednesday, led by tariff-sensitive technology and industrial stocks after China extended an olive branch ahead of next month's trade negotiations with the United States.

Back home, India share markets opened the day on a positive note. The BSE Sensex is trading up by 147 points while the NSE Nifty is trading up by 36 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.4%.

Except IT stocks and telecom stocks, all sectoral indices have opened the day on a positive note with metal stocks and energy stocks witnessing maximum buying interest.

The rupee is currently trading at 71.41 against the US$.

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The rupee recovered from initial losses to settle higher by 5 paise at 71.66 against the US currency on Wednesday, extending gains for a fifth straight session on the back of firm domestic equities and Asian currencies like the Chinese yuan.

Reportedly, the uptick in domestic stocks enthused investors, following which the domestic unit gained strength and recovered from early losses.

At the interbank foreign exchange market, the local unit witnessed heavy volatility. During the day, the domestic unit shuttled between a high of 71.60 and a low of 71.84.

The rupee finally settled at 71.66, higher by 5 paise over its previous close.

The rupee on Monday had closed at 71.71 against the US dollar.

This is the fifth straight session of gain for the rupee during which it has appreciated by 73 paise.

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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 pharma sector. As per an article in a leading financial daily, Dr. Reddy's Laboratories has launched Fosaprepitant Injection in the US market.

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The drug is a therapeutic generic equivalent of EMEND (fosaprepitant) for injection and is approved by the US Food and Drug Administration (USFDA).

The EMEND for Injection brand had US sales of approximately US$279 million MAT for the most recent twelve months ending in July 2019 according to IQVIA Health.

Dr. Reddy's Fosaprepitant for Injection is available in 150 mg single-dose vial for reconstitution.

Dr. Reddy's Lab share price opened up by 0.4%.

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.


Indian Indices Continue Momentum, Global Stock Market Drivers, and Top Cues in Focus Today
Pre-Open

On Wednesday, Indian share markets witnessed buying interest throughout the day and ended higher.

The BSE Sensex closed higher by 125 points to end the day at 37,271. Yes Bank and Tata Motors were among the top gainers.

While the broader NSE Nifty ended up by 33 points to end at 11,036.

Among BSE sectoral indices, realty stocks gained the most, followed by automobile stocks and metal stocks.

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Top Stocks in Action Today

Dr Reddy's Laboratories share price will be in focus today as the company announced the launch of Fosaprepitant for Injection, the therapeutic generic equivalent of EMEND (fosaprepitant) for injection, approved by the US Food and Drug Administration (USFDA).

DHFL share price will also be in focus today as the company has defaulted in payment of interest due on September 3 and 4 in respect of NCDs on private placement basis and public issue.

Market participants will also track Cyient share price.

Reportedly, the company has signed a Memorandum of Understanding (MoU) with UK-based defence technology firm, QinetiQ's Target Systems (QTS), to offer avionics products for its unmanned target systems.

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

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From the Banking Sector...

Shares of Yes Bank gained over 15% yesterday after reports emerged that the private lender's co-founder Rana Kapoor was in talks with One97 Communications, owner of Paytm, to sell his stake.

According to reports, Kapoor held preliminary talks with Vijay Shekhar Sharma, founder of One97 Communications. The structure of the deal would depend on the approval from the Reserve Bank of India (RBI), given that Sharma already owns a stake in Paytm Payments Bank.

Note that Yes Bank's shares have seen a steady decline since August last year, when the Reserve Bank of India said Rana Kapoor's term as the bank's CEO will not be renewed after January 2019.

Kapoor and his associate entities owned 10.6% in the bank at the end of June 2019. Around 7.3% of the Kapoor family stake has been pledged with Reliance Nippon Asset Management Company.

Last month, Moody's Investors Service downgraded the private lender's long-term foreign currency issuer rating, citing the bank's capital raise that fell short of its expectations.

Stay tuned for more updates from this space.

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From the Commodity Space...

Oil prices rose on Wednesday after a sharp drop in US crude stocks as OPEC member Iraq said the producer group will discuss whether to deepen output cuts.

Prices rose earlier this week after Saudi Arabia's new energy minister, Prince Abdulaziz bin Salman said oil policy would not change and a deal with other producers to cut output by 1.2 million barrels per day would be maintained.

Iraq's oil minister on Wednesday, said the Organization of the Petroleum Exporting Countries will discuss at a ministerial meeting on Thursday whether to deepen cuts. The previous OPEC meeting had discussed cuts of 1.6-1.8 million barrels per day, he said.

Oil prices have risen more than 7% this month, supported by declines in global inventories and signs of an easing in trade tensions between the United States and China, the world's two largest economies and energy consumers.

Buying interest was also seen after data from the American Petroleum Institute (API) showed US crude stocks fell last week by 7.2 million barrels, more than twice the amount analysts in a Reuters poll had forecast.

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

Global Stock Market Drivers

Global stocks rose for the sixth straight day on Wednesday and bond prices fell as investors continued to unwind safety bets, encouraged by hopes of a resolution to the Sino-US trade standoff and signs Europe may be preparing to ease budget spending rules.

Higher-risk assets rose across the board at the expense of safe-haven plays such as gold and bonds, as political risk appeared to ease in Britain, Italy and Hong Kong.

China announced exemptions for 16 types of US products from additional retaliatory duties, in a move that comes as trade negotiators from the two countries prepare to meet later this month to try and de-escalate their protracted tariff row.

Currency markets too reflected the risk-on mood as the dollar strengthened 0.2% to 107.795 yen, its highest in six weeks, and the British pound hovering near six-week highs of US$ 1.2385 hit earlier in the week.

The yen had rocketed towards a 2019 high in August as investors fretted about recession and market selloffs.

As per the economic schedule released by Vijay Bhambwani, editor of Weekly Cash Alerts, here are the important events to look forward to this week:

  • Germany's August CPI data
  • India's August CPI data, Industrial Production, and Manufacturing data for July
  • USA's Core CPI data.

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