Sensex Slumps Over 275 Points; Realty and Banking Stocks Witness Selling
Closing

After trading on a volatile note throughout the day, share markets in India witnessed selling pressure during the closing hours and ended the day in red. All sectoral indices traded in red, with stocks in the banking sector and realty sector leading the losses.

At the closing bell, the BSE Sensex stood lower by 279 points (down 0.8%) and the NSE Nifty closed down by 91 points (down 0.8%). The BSE Mid Cap index ended the day down 1.7%, while the BSE Small Cap index ended the day down by 3.0%.

The rupee was trading at Rs 72.25 against the US$ in the afternoon session.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 1.7% and the Shanghai Composite was up by 2.4%. The Nikkei 225 was up by 0.8%. Meanwhile, European markets were also trading on a positive note. The FTSE 100 was up by 1.1%. The DAX was up by 0.6%, while the CAC 40 was up by 0.7%

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In news from the banking sector, Yes Bank share price was in focus today. The stock of the company witnessed selling pressure after the Reserve Bank of India (RBI) denied its promoter and current CEO Rana Kapoor an extension to continue his term as the bank's CEO.

While the RBI denied the three-year extension approved by the bank, it has allowed Rana Kapoor to continue as the MD & CEO till 31 January 2019.

This will be the second time when an Indian bank chief has failed to get an extension which was approved by shareholders. Earlier, Axis Bank's chief executive Shikha Sharma was denied an extension request by the RBI. Another CEO of ICICI Bank-Chanda Kochhar is being probed for alleged irregularity in loan approvals.

Moving on to the news from the sugar sector, the Competition Commission of India (CCI) on Thursday imposed a penalty of Rs 380.5 million on sugar mills and their associations for rigging bids with regard to a joint tender floated by oil marketing cos for procurement of ethanol for blending with petrol.

The regulator also directed the sugar mills and the associations - Indian Sugar Mills Association (ISMA) and Ethanol Manufacturers Association of India (EMAI) - to cease and desist from indulging in conduct that has been found to be in contravention of Section 3 of the Competition Act (section 3 pertains to anti-competitive agreements).

On the back of the above development, stocks such as Bajaj Hindustan Sugar share price, Simbhaoil Sugars share price, Andhra Sugars share price, Balrampur Chini Mills share price, and Dalmia Bharat Sugar and Industries share price witnessed most of the selling pressure.

Financial stocks also witnessed a beating today. Stocks such as DHFL, Indiabulls Housing Finance and Can Fin Homes all plunged up to 55%.

Dewan Housing Finance Corporation (DHFL) share price skidded over 50% fearing liquidity crisis. The management, however, assauged investor concerns, and said the company has not defaulted on any repayments.

In the news from macroeconomic space, as per a leading financial daily, the Indian government is planning to announce lower than expected borrowing needs for the second half of FY19.

As per the news, senior Indian government officials met with a select group of market participants earlier this week and assured them that the bond market borrowing programme for October to March would be lower than expected.

The meeting was held to get feedback on the ongoing volatility in bond and currency markets, and also to assure market participants about the government's intention to stick to its fiscal deficit and borrowing targets.

Also, speaking of borrowing needs, the economies that were already at the brink of sovereign default in 2008 haven't done much better of late. In fact, countries like China, which have doubled their debt obligation in the past decade, have added to the pressure.

But you would be wrong to assume that it's only the governments of these economies that have the debt problem. Rather it is corporate and individuals too that are heavily in bad debt.

India hasn't really joined this bloating empire of debt. It's among the few economies which has seen its overall debt to GDP fall in the past decade.

India Hasn't Joined the 'Empire of Debt' in the Past Decade


Nevertheless, after the oil and currency contagion, the global debt contagion is going to hurt all emerging markets alike. Including India.

It would be interesting to see how this pans out. Meanwhile, we'll keep you updated on all the development from this space.

Now you can also listen to our stock market podcast. Just visit SoundCloud, iTunes or Stitcher and access our free weekly podcast. Happy listening!

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

You can listen to this week's stock market updates in our brand new podcast below. Tune in!


Sensex Recovers after Crashing Over 1000 Points; DHFL Tanks 50%
01:30 pm

Stock markets in India plunged in the afternoon session today. The BSE Sensex recovered after tanking 1,000 points in intra-day deals.

The fall came on the back of a sharp correction in NBFC and housing finance stocks. Dewan Housing Finance Corporation (DHFL) skidded over 50% fearing liquidity crisis. The management, however, assauged investor concerns, and said the company has not defaulted on any repayments.

The selloff was so intense that the Sensex crashed over 800 points within a matter of minutes. The recovery was equally swift as the BSE immediately recovered over 700 points.

Financial stocks took a big beating. DHFL, Indiabulls Housing Finance and Can Fin Homes all plunged up to 55%.

Presently, the BSE Sensex is trading down by 240 points and the NSE Nifty is trading down by 99 points.

Among the sectoral indices, automobiles, banks, FMCG, infra, metals and pharmaceuticals are all seeing a selloff.

Broader markets too took a battering as BSE Midcap and BSE Smallcap indices dropped nearly 6% each. However, both the indices recovered significantly and were trading up to 3.5% down at the time of writing.

Note that, the Indian share markets started on a positive note on Friday following lower crude oil prices, a sharp recovery in Indian rupee value vs US dollar.

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


Indian Indices Trade Strong; Yes Bank Tanks 20%
12:30 pm

After opening the day in green share markets in India are trading on a positive note and are presently trading above the dotted line. Sectoral indices are trading on a mixed note, with stocks in the and stocks in the witnessing maximum buying interest.

The BSE Sensex is trading up by 204 points (up 0.6%) and the NSE Nifty is trading up by 50 points (up 0.5%). Meanwhile, the BSE Mid Cap index is trading down by 0.2%, while the BSE Small Cap index is trading down by 0.8%. The rupee is trading at 71.79 to the US$.

In news from stocks in the aviation sector. The government is mulling a strategic sale of four of its subsidiaries to raise funds and help cut debt.

The potential list includes its passenger and cargo-handling business, MRO (maintenance, repair and overhaul) business, hotels and its regional airline. At the moment, only the cargo-handling business - Air India Air Transport Service (AIATSL) delivers profits for India's national airline.

Strategic sale of AIATSL, which provides ground handling services, is being planned as part of the turnaround scheme for Air India which is reeling under a debt burden of Rs 480 billion at end of March 2017.

In 2016-17, AIATSL clocked a profit of over Rs 334 million, earning Rs 6.2 billion in revenues from its handling operations. Both its revenues and profits dipped as compared to the previous year, but the company hasn't run a loss since it started operations as a separate subsidiary of Air India in 2013.

Earlier it was reported that the government was planning a relief package for the national carrier.

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As part of the plan, the government sought to reduce the airlines' costs. In addition, the government also assured the debt ridden national carrier - Air India of Rs 21 billion in the form of guaranteed borrowing from the government.

In April, the government had invited bids for a 76% stake in Air India, along with a 100% stake in subsidiary Air India Express, and 50% in Air India SATS Airport Services. However, it did not receive any bids since investors were wary of potential government interference as it would retain a 24% stake.

The government eventually dropped the plan to privatise the national carrier.

Indian Aviation Spreading its Wings


Air travel has recorded double-digit growth for 45 consecutive months, thanks to low fares, the addition of new flights/destinations, and overall growth in the economy. What's foreseeable for India's aviation traffic in 2018 is some pressure on the back of the consistent rise in crude oil prices. Last month, Brent crude oil briefly breached US$80 per barrel and touched its highest level since December 2014.

Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth. Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.

Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.

Moving on to news from . is among the top losers today after the Reserve Bank of India (RBI) denied its promoter and current CEO Rana Kapoor an extension to continue his term as the bank's CEO.

While the RBI denied the three-year extension approved by the bank, it has allowed Rana Kapoor to continue as the MD & CEO till 31 January 2019.

This will be the second time when an Indian bank chief has failed to get an extension which was approved by shareholders. Earlier, Axis Bank's chief executive Shikha Sharma was denied an extension request by the RBI. Another CEO of ICICI Bank-Chanda Kocchar is being probed for alleged irregularity in loan approvals.

Rana Kapoor's leadership came into question after the RBI pointed out discrepancies in Yes Bank's non-performing assets, the difference between what the bank reported and what the banking regulator found.

On 18 April, 2017, RBI asked all banks to make suitable disclosures wherever the additional provisioning requirements assessed by the RBI exceeded 15% of the reported net profit for the reference period, or if the additional gross NPAs identified by the RBI exceeded 15% of the reported incremental gross NPAs.

At the time of writing, Yes Bank share price was trading down by 20%.


Sensex Opens Over 280 Points Up; ICICI Bank & Tata Steel Top Gainers
09:30 am

Asian share markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.5% while the Hang Seng is up 1%. The Shanghai Composite is trading up by 1%. Meanwhile, trade-sensitive industrial stocks led the Dow Jones Industrial Average to a record closing high on Thursday, the last of Wall Street's main indices to fully regain ground since a correction that began in January.

Back home, India share markets have opened the day on a strong note. The BSE Sensex is trading up by 286 points while the NSE Nifty is trading up by 88 points. The BSE Mid Cap index and BSE Small Cap index opened the day up by 0.7% & 0.3% respectively.

Barring information technology stocks, all sectoral indices have opened the day in green with PSU stocks and metal stocks witnessing maximum buying interest.

The rupee is trading at Rs 71.84 against the US$.

The rupee on 19 September rebounded by 61 paise, notching up its best single-day gain since March 2017 to close at 72.37 against the US currency supported by heavy dollar selling by banks and weakness in the greenback in global markets.

Snapping its two-day decline, the rupee opened higher at 72.71 against its record closing low of 72.98 on September 18 and touched a session high of 72.34 in day trade as crude oil prices eased globally.

The rupee closed at 72.37, up by 61 paise or 0.84% its best single-day gain since 14 March 2017.

Heavy dollar selling by exporters along with state-run banks likely on the behalf of the RBI, too boosted the rupee sentiment, restricting the local unit from breaching the 73 level.

Note that, the rupee is the worst performer in Asia in 2018. It has fallen by around 12% against the US dollar this year.

Indian Rupee is the Worst Performing Currency in Asia

The rupee is under pressure due to a strong dollar and high oil prices. Similarly, the spill-over from the emerging-market turmoil in Argentina and Turkey is weighing on the rupee.

The falling rupee is also triggering sales of bonds and stocks, which in turn is further pressuring the rupee.

Nevertheless, last week, the government announced several measures. This includes cutting down non-necessary imports, removal of withholding tax on rupee-denominated bonds, and easing overseas borrowing norms.

That said, in the near term, the rupee being under pressure could benefit export-oriented businesses.

The recent Smart Money Secrets recommendation will benefit from the rupee depreciation.

The company derives around 65% of the revenue from exports. The icing on the cake is the company's focused entry into the B2C segment, which provides it a long runway for future growth.

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In another development, oil prices dipped today after falling in the previous session as US President Donald Trump urged OPEC to lower crude prices ahead of its meeting in Algeria this weekend.

Trump called on the Organization of the Petroleum Exporting Countries (OPEC) to lower prices.

OPEC and its allies are scheduled to meet on Sunday in Algeria to discuss how to allocate supply increases to offset a shortage of Iran supplies due to US sanctions.

Reportedly, Trump's remarks just days before the OPEC meeting put a focus on the likely supply impacts of US-led Iran sanctions.

The market had until that point been trading fluidly with the assumption that Saudi Arabia is now comfortable with Brent at US$80 or even higher, which is challenging the market's long-held supposition that prompt Brent between US$70 and US$80 was OPEC's sweet spot.

Brent has been trading just below US$80 a barrel, backed by concerns of supply shortages from looming US sanctions against Iran, which are set to take effect in November.

Note that crude oil prices witnessing buying interest, doesn't bode well for the Indian economy. It not only affects fuel prices, but also has many other repercussions on the macroeconomic level.

Rising crude oil prices can be a big worry for the Modi government as well as it has been a big beneficiary of lower crude oil prices.

Apart from that, what does rising crude oil prices mean for stock markets?

Richa Agarwal, editor of Hidden Treasure, tracks the oil and gas sector very closely. She believes the rise in crude oil prices is a bearish sign for stock markets globally. At the same time, any market correction, will throw up interesting buying opportunities in small-cap stocks.

This is what she wrote...

  • After hitting a low of US$ 30 per barrel in January 2016, prices have more than doubled this year.While the Hidden Treasure team looks for long-term wealth creators, such macro situations can help to recommend such stocks at a bargain. The ones who keeps calm, when everyone else is losing their heads, will gain the most when the tide turns.

It would be interesting to see how Iranian sanctions will influence crude oil prices. Meanwhile, we will keep you posted on all the updates from this space.

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

Now you can also listen to our stock market podcast. Just visit SoundCloudiTunes or Stitcher and access our free weekly podcast. Happy listening!


Indian Indices Continue Downtrend, IPO Buzz, and Top Stocks in Action Today
Pre-Open

On Wednesday, share markets in India witnessed volatile trading activity and ended on a negative note. Among sectoral indices, FMCG stocks and realty stocks lost the most.

At the closing bell on Wednesday, the BSE Sensex stood lower by 170 points (down 0.5%) and the NSE Nifty closed down by 45 points (down 0.4%). The BSE Mid Cap index ended down by 0.5%, while the BSE Small Cap index ended lower by 1.3%.

Top Stocks in Action Today

Tata steel share price will be in focus today as the company reportedly completed the acquisition of 51% equity stake in Creative Port Development (CPDPL).

Earlier, the company had executed definitive agreement for development of Subarnarekha Port & acquisition of 51% equity shares of CPDPL.

To know more about the company, you can access Tata steel Q1FY19 result and Tata steel 2017-18 Annual Report on our website.

Indian hotels share price will also be in focus as the company has entered into a partnership with Ithra Dubai LLC for a new Taj hotel at the Deira Creek in Dubai.

The new Taj hotel is a greenfield project slated to open in early 2022 and would be part of Deira Waterfront Development.

Market participants will also be tracking TVS motors share price.

As per an article in a leading financial daily, the company has entered into a partnership with leading distributer in the Mexican region, Torino Motors, a subsidiary of Groupo Autofin. With over 40 years of experience in the region, Torino Motors specialises in automobile and retail finance.

From the IPO space...

In the news from the IPO space, Dinesh Engineers has fixed a price band of Rs 183-185 per equity share for its initial public offering. The offer is a book-built issue IPO comprising of 10 million shares aggregating up to 1.9 billion.

In another news, the state-owned engineering and construction company IRCON International was subscribed nearly 10 times on the last day of subscription.

The offer received bids for around 97.6 million shares against the total issue size of 9.9 million.

The issue has a price band of Rs 470-475 per share and the equity shares are proposed to be listed on BSE and NSE. The public issue comprises an offer for sale of 9.9 million equity shares by its promoter, The President of India, acting through the Ministry of Railways, Government of India.

The net issue proceeds from the IPO will be utilised towards repayment of certain borrowings and for general corporate purposes.

IRCON International Limited is a Mini Ratna government company incorporated by Central Government (Ministry of Railways) under the Companies Act, 1956 on 28th April 1976. It is an integrated engineering and construction company specializing in major infrastructure projects, including railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV sub-stations, electrical and mechanical works, commercial and residential properties, development of industrial areas, and other infrastructure activities.

To know more about the company, you can read our IPO analysis of IRCON International Ltd. (requires subscription).

Also, with so many IPOs set to hit the markets, we at Equitymaster 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 how to safely profit from the ongoing IPO rush, download this FREE report now and discover How to Get Rich with IPOs.

AMCs Back in News...

Shares of asset management companies (AMCs) witnessed selling pressure on Wednesday on fears of the impact on their revenue and profitability after the market regulator reduced the total expense ratio (TER) - the fee funds collect from investors every year.

The development came as the regulator capped the total expense ratio for equity oriented mutual fund schemes (close ended and interval schemes) at 1.25% and for other schemes at 1%. The cap for fund of funds was capped at 2.25% for equity-oriented schemes and 2% for other schemes.

The regulator said that all the mutual fund commissions and expenses must be paid from the scheme itself and that the industry must adopt a full trail mode of commission in all schemes without paying any upfront commission.

Rupee Strengthens

The rupee strengthened against the US dollar on Wednesday after a news report said the Reserve Bank of India was studying off-market swap deals for oil retailers.

On Tuesday, the rupee touched an all-time low of 72.97 to a dollar as crude oil surged amid concerns about Iranian supply and a report that Saudi Arabia was comfortable with Brent prices above $80 a barrel.

Rising Crude Oil Prices

Oil prices rose yesterday, amid drawdown in US inventories and strong US gasoline demand.

US sanctions affecting Iran's oil exports come into force on November 4. Reportedly, many buyers have already reduced Iranian purchases.

According to the news in a leading financial daily, The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia meet on Sunday in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.

Interest Rates Raised

Interest rates on small saving schemes such as Public Provident Fund (PPF), National Savings Certificates (NSC) and Post Office deposit scheme have been increased by the finance ministry.

PPF and NSC will earn interest at 8% while Senior Citizens Savings Scheme, which has a tenure of five years, will fetch 8.7%. The new interest rates will be effective for the October-December period.