Sensex Ends 76 Points Lower; Telecom and Metal Stocks Witness Selling
Closing

India share markets witnessed selling pressure during closing hours and ended their volatile day marginally lower.

At the closing bell, the BSE Sensex stood lower by 76 points (down 0.2%) and the NSE Nifty stood down by 30 points (down 0.3%).

The BSE Mid Cap index ended the day down 0.7%, while the BSE Small Cap index ended the day down 0.4%.

Sectoral indices ended on a mixed note. Stocks in the telecom sector, metal sector and energy sector witnessed huge selling pressure, while realty stocks were trading in the green.

The rupee was trading at 71.71 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 1.57% and the Shanghai Composite was down by 0.25%. The Nikkei 225 was down 0.48%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.51%. The DAX was trading down by 0.22%, while the CAC 40 was also down by 0.22%.

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In the news from the commodity space, gold was witnessing buying interest today. Gold prices rose today supported by the concerns that US bills on Hong Kong could increase tensions between the US and China.

Prices also scaled up yesterday on sensitive worries that a Sino-US trade deal could hit a hurdle as the US Senate passed a bill to back up Hong Kong anti-government activists. Prices recovered after news that US-China first phase trade deal will not be completed this year.

Note that gold prices have been weighed down early this week as optimism grew about US-China trade ties following a report of "constructive talks" over the weekend, while losses were capped by a softer dollar.

Gold is considered a safe store of value during times of economic or political uncertainty.

Speaking of gold, Vijay Bhambwani talks about how gold has been relied upon by humankind for 3000 years in one of his videos.

If you consider street inflation, your fixed deposits are giving negative yields. In times like these, Vijay considers gold as a safe haven.

So, is it the time to buy gold?

Tune in to find out...

Moving on to the news from the IPO space, realty firm Puranik Builders has filed fresh papers with Indian stock markets regulator to raise an estimated Rs 10 billion through its initial share-sale.

The IPO comprises fresh issue of shares worth Rs 8.1 billion, besides, an offer for sale up to 18,59,620 equity shares by the company's promoters and existing shareholders.

Proceeds from the above issue will be utilised towards repayment of loan and other general corporate purposes of the company. In addition, the company plans to receive the benefits of listing of its equity shares on the stock exchanges.

Edelweiss Financial Services Ltd and Axis Capital will manage the company's initial share-sale and the shares of the company will be listed on the BSE and NSE.

Earlier in June 2018, the company had approached Sebi with its IPO papers and had received the markets regulator's clearance to launch the public issue but did not go ahead with the plans then.

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In other news, the IPO of Kerala-based private sector lender CSB Bank, formerly known as Catholic Syrian Bank will hit the markets tomorrow and will be available at a price band of Rs 193-195 apiece.

The bids for the offer can be applied for a minimum of 75 shares and its multiples.

CSB Bank is one of the oldest private lenders in India, having a strong presence in Kerala, Tamil Nadu, Maharashtra and Karnataka.

For the six months ended September 30, the bank reported a revenue of Rs 8.17 billion. Its profit, for the first half of FY20, stood at Rs 443 million, reversing the loss of Rs 657 million reported in FY19.

In terms of asset quality, the bank's gross non-performing assets (NPA) were 2.86% of its total advances, declining from 4.87% as of March 31.

Its total NPA provisioning and write-offs stood at Rs 2.7 billion for the six month period ended September 30, against Rs 11.3 billion provisioning and write offs between FY17-19.

How this IPO sails through the market remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Speaking of IPOs, the year 2019 hasn't seen much activity in the IPO market. Since the start of the year, there have been just 13 IPOs on the BSE main board.

Even the ones that hit the primary markets were mostly small to mid-sized IPOs. And no mega IPOs.

The total amount raised through IPOs has shrunk to Rs 107.2 billion in 2019, a third of the Rs 309.6 billion raised in the previous year.

Very few companies come out with IPOs during bearish market conditions. So, when the IPO market is sluggish, you must take that as an indicator of market sentiment and liquidity conditions.

However, it is interesting to note that despite the tepid market conditions, most of the companies gave positive listing day gains.

In fact, if you had invested in each one of them and held them till now, your gains would have been even better.

The chart below shows the top five performing IPOs of 2019:

Top 5 Performing IPOs of 2019

Top 5 Performing IPOs of 2019

As you can see in the chart, the best IPOs of 2019 have delivered fantastic returns. In fact, 10 of the 13 companies have delivered positive returns.

So, unlike bull markets wherein selling shareholders do their best to squeeze the highest price, bear markets often offer fantastic opportunities to spot great companies and get onboard early on.


Sensex Remains Rangebound; Bharti Airtel and ONGC Top Losers
12:30 pm

Stock markets in India are presently trading flat. The BSE Sensex is trading down by 31 points and the NSE Nifty is trading down by 14 points. The BSE Mid Cap index is trading down by 0.1%, while the BSE Small Cap index is trading flat.

Among the sectoral indices, telecom stocks and oil & gas stocks are witnessing selling pressure. Automobiles stocks and IT stocks are trading in green.

Speaking of the Sensex touching record high, how expensive is the Sensex at current levels? What has the trend been in recent years?

It would be interesting to see how the valuation of the index has moved over the last five years.

The chart below maps the price to earnings ratio of the Sensex from October 2014 to now.

How Pricey Is the Sensex Now?

How Pricey Is the Sensex Now

Here's what Ankit Shah wrote about this in a recent edition of The 5 Minute WrapUp...

  • It is worth noting that the Sensex has gained 44% over the last five years, compounding at an annual rate of 7.6% (excluding dividends).

    Not quite impressive.

    During the same period, the Sensex price to earnings ratio has mostly been in a rising trend, except some intermittent declines.

    Between October 2014 and now, the gain in the Sensex price to earnings ratio is 42%. That means that the gains in the index have mostly come from expansion in the valuation multiple, and just meagerly from increases in earnings.

So, before taking the current market bullishness for granted, do weigh in the fact that the Sensex is quite expensively priced.

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Also, amid the mood swings of Mr. Market witnessed lately, Tanushree Banerjee in the video below talks about the Rebirth of India phenomenon and how 3 specific trends are racing ahead even in these gloomy times.

Tune in to find out more...

In the news from the currencies space. The rupee today opened 3 paise down at 71.84 against the US dollar amid rising crude oil prices and fresh concerns over US-China trade tensions that supported demand for the safe-haven greenback.

The local currency declined 10 paise to close at 71.81 against the American currency on Wednesday, in line with weak Asian currencies.

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In the last couple of sessions, rupee consolidated in a narrow range despite gains in domestic and global equities following optimism related to trade talks between US and China.

But yesterday, US equities came under pressure following reports that 'Phase One' deal between the two major economies could slide into next year.

Reportedly, China is pushing for more extensive tariff rollbacks and the Trump administration counters with heightened demands of its own.

Euro and Pound in the last few sessions have been trading positive ahead of the important preliminary manufacturing and services PMI number that will be released in tomorrow's session.

Today, from the Euro zone, ECB minutes will be in focus and expectation is that the central bank will continue to maintain a dovish stance and could extend gains for the currency.

Let's wait and watch how this pans out.

Moving on to the news from the automobiles sector. As per the rating agency India Ratings and Research, implementation of the BS-VI emission norms from April 2020 could lead to some short-term headwinds for the commercial vehicle (CV) segment.

Considering the sharp year-on-year fall in the sales volumes of CVs, especially since May 2019, the underwhelming pace of industrial activity and the higher cost of ownership of a BS-VI compliant CV, the implementation of BS-VI could add to the sector's woes.

Furthermore, given the excess supply and muted demand-side fundamentals in the economy, the rating agency believes the pre-buying of BS-IV CVs till end of the fourth quarter of the current fiscal is unlikely to be meaningful as compared with the earlier occasions when new emission norms had been implemented.

It said for fleet owners, the ownership of BS-VI vehicle would be credit neutral as the benefits from fuel efficiency and maintenance would largely be offset by higher debt repayments.

It noted the revised axle load norms led to inorganic capacity expansion in the system while demand-side fundamentals have remained fairly muted as evident from the decline in the index of industrial production and the decrease in the aggregate volumes of manufacturing companies.

Besides, the agency said that demand for CVs would remain challenged in the near term by the slowing growth of industries and the economy in general as well as by the impact of the extended monsoon on agricultural produce and rural demand.

Automobile stocks are trading mixed with Eicher Motors and TVS Motors leading the gainers.

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


Indian Stock Markets Open Flat; Telecom and Metal Stocks Drag
09:30 am

Asian share markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.2% while the Hang Seng is down 1.5%. The Nikkei 225 is trading down by 1.2%. Wall Street's main indices ended Wednesday's session lower on concerns that a "phase one" trade deal between Washington and Beijing may not be completed this year, while minutes from the Federal Reserve's October policy meeting appeared to offer little help.

Back home, India share markets opened flat. The BSE Sensex is trading down by 5 points while the NSE Nifty is trading flat. The BSE Mid Cap index and BSE Small Cap index opened up by 0.1% and 0.3% respectively.

Sectoral indices have opened the day on a mixed note with capital goods stocks and IT stocks witnessing buying interest. Telecom stocks and metal stocks are trading in red.

The rupee is currently trading at 71.74 against the US$.

In the news from global economy. According to minutes released yesterday from their most recent meeting, Federal Reserve officials generally agreed that they likely won't need to cut interest rates again unless economic conditions change significantly.

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Central bankers in late October cut their benchmark overnight lending rate a quarter point to a range of 1.5%-1.75%, the third such move in 2019.

However, in doing so "most" Federal Open Market Committee members saw the moves as enough "to support the outlook of moderate growth, a strong labor market, and inflation near the Committee's symmetric 2% objective.

The stance of policy "likely would remain" where it is "as long as incoming information about the economy did not result in a material reassessment of the economic outlook."

They maintained, however, that policy isn't on a preset course, even if it is likely to remain on hold, and members will continue to assess changes in data and the general outlook.

Members often note that Fed policy adjustments work on a lag that can take a year or more to be felt, so they intend on watching how the switch to easier policy will impact financial conditions.

The cuts started in July, just seven months after the committee approved the fourth-rate hike of 2018.

Moving on to the news from the banking sector. Finance Minister Nirmala Sitharaman recently said Public Sector Banks (PSBs) reported frauds of over Rs 957 billion in the first six months of the current fiscal (H1FY20).

During the period from April 2019 to September 2019, as many as 5,743 cases of fraud were reported. She further said that comprehensive measures have been taken to curb the incidence of frauds in banks.

The measures included the freezing of 3,38,000 bank accounts of inoperative companies in the last two financial years in addition to the enactment of a law with a provision to confiscate the property of economic offenders.

Besides, the Reserve Bank of India's (RBI) annual report for FY19 released earlier this year, cases of frauds reported by banks went up by 15% on a year-on-year basis from FY19.

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As per the report, the sector reported 6,801 frauds cases which amounted to a loss of Rs 715.4 billion in FY19. This was higher than the 5,916 cases reported in FY18, which caused a loss of Rs 411.7 billion in FY18.

Public sector banks, which constitute the largest market share in bank lending, accounted for the bulk of frauds reported in FY19.

Speaking of fitter PSBs, which banks look the best match post the latest matchmaking of PSU banks?

Needless to say, most investors would also be worried about the level of NPAs and current and savings accounts (CASA) of the merged entities.

Lower NPA ratio and sustenance of high CASA, in the future, could signal the banks' fitness levels to lend more.

But what could go unnoticed is the efficiency potential of the merged entities.

Post-merger, the employee per branch ratio of the consolidated PSU entities could be in the range of 7 to 9 per branch. This would be almost half that of their private sector counterparts like HDFC Bank and Kotak Bank.

India's Top 6 Public Sector Banks Are Getting Fitter

India's Top 6 Public Sector Banks Are Getting Fitter

Leaner operations would mean use of technology to support growth.

So, we would not be surprised if the PSU entities leverage technology at a much bigger scale than their private sector peers, in a few years.

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


Sensex Touches Record High, Rising Domestic Air Passenger Traffic, and Top Cues in Focus Today
Pre-Open

Indian share markets ended their day on a positive note during closing hours yesterday.

During the trading session yesterday, the BSE Sensex rallied more than 300 points to hit a fresh record high of 40,816, while the NSE Nifty broke above its crucial resistance level of 12,000.

At the closing bell yesterday, the BSE Sensex stood higher by 181 points (up 0.5%) and the NSE Nifty closed higher by 59 points (up 0.5%).

The BSE Mid Cap index ended up by 0.3%, while the BSE Small Cap index ended the day up by 0.1%.

On the sectoral front, gains were seen in the healthcare sector and energy sector. Realty sector and consumer durables sector, on the other hand, witnessed selling.

Speaking of stocks markets in India, current volatile markets and some recent economic numbers have confused investors.

Tanushree Banerjee decodes a few economic myths and reveals three big trends of Rebirth of India in the video below.

Tune in...

Top Stocks in Focus Today

From the realty sector, DB Realty share price will be in focus today as Prestige Group has picked up 29% stake in commercial development of a DB Realty project.

The commercial property in Mumbai's Bandra locality has a development potential of over 7 lakh sq ft and is valued at about Rs 21 billion, the reports stated.

The joint venture entity will develop a mixed-use project with total 200 hotel rooms, while the rest will be office space.

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From the power sector, Kalpataru Power Transmission share price will also be in focus today as the company has exited one of its subsidiaries.

In a filing, Kalpataru Power Transmission said it had completed the sale of its entire stake in Kalpataru Satpura Transco on November 20 after obtaining the regulatory and other approvals.

Consequently, Kalpataru Satpura Transco Private Limited ceases to be the subsidiary of the company from November 20.

The company has entered into definitive agreements to sell its stake in three subsidiaries to CLP India Private Limited, subject to receipt of relevant approvals and completion of conditions precedent.

Domestic Air Passenger Traffic Increases in October

In the news from the airlines sector, as per the latest data released by the Directorate General of Civil Aviation (DGCA), the domestic air passenger traffic increased by 4% to 12.3 million in October 2019 as compared to 11.8 million in the same month of last year.

In September this year, the domestic passenger growth was just 1.2% as compared to the same month last year.

The passenger load factor in the month of October has shown increasing trend compared to previous months primarily due to the onset of tourist season.

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According to data, the passenger load factor of all major airlines, Air India, SpiceJet, GoAir, IndiGo, AirAsia and Vistara declined in October as compared to September this year.

The passenger load factor measures the seat capacity utilisation of the airline.

IndiGo maintained its lead position with 47.4% share of the domestic passenger market in October.

SpiceJet's market share increased from 14.7% in September to 16.3% in October, giving it the number two spot. The market share of Air India, GoAir, AirAsia and Vistara was 12.6%, 11.2%, 6.5% and 5.4% respectively in October.

NPA Divergence at YES Bank...

Yes Bank reported a lower net profit of Rs 10.8 billion for the financial year 2018-19 against Rs 17.2 billion announced earlier due to higher non-performing assets (NPAs) assessed by the Reserve Bank of India (RBI).

The divergence in net NPAs of the bank - the difference in bad loans reported by the bank and the assessment done by the RBI - stood at Rs 22.9 billion for 2018-19.

The lender in a statement said the adjusted (notional) net profit after tax for the year ended March 31, 2019 after taking into account the divergence in provisioning was at Rs 10.8 billion.

The divergence in provisioning was at Rs 9.7 billion.

Note that the Indian stock market regulator has put in place tighter disclosure norms, directing all listed banks to disclose any divergence in bad loan provisioning within 24 hours of receiving RBI's risk assessment report, rather than waiting to publish the details in their annual financial statements.

In another development, Yes Bank yesterday informed the exchanges that Rana Kapoor and promoter entities Yes Capital and Morgan Credits sold their remaining 0.8% stake in bank.

In September, the promoter entities had sold a combined 2.75% in YES Bank through the open market process.

Note that Yes Bank is in need of money to stay compliant with RBI's capital adequacy norms and create enough buffers to provision against bad loans in the coming quarters.

As of the September quarter, Yes Bank's tier I capital adequacy ratio stood at 11.5% against the regulatory requirement of 8.875%.

Its common equity tier 1 capital stood at 8.7%, marginally above the regulatory requirement of 7.375%.

The bank has met at least half-a-dozen large private equity firms and about a dozen foreign family offices since August.

We will keep you updated on all the developments from this space.

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