Sensex Ends 38 Points Lower; Energy and Realty Stocks Witness Selling
Closing

India share markets ended their volatile day marginally lower.

At the closing bell, the BSE Sensex stood lower by 38 points (down 0.1%) and the NSE Nifty stood down by 6 points (down 0.1%).

Both, the BSE Mid Cap index and the BSE Small Cap index, ended their day down by 0.1%.

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

The rupee was trading at 71.16 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.13% and the Shanghai Composite was down by 1.40%. The Nikkei 225 was up 0.02%.

European markets were also trading on a mixed note. The FTSE 100 was up by 0.14%. The DAX was trading down by 0.16%, while the CAC 40 was trading flat.

Speaking of Indian share markets, in the video below, Rahul Shah talks about the one important chart all investors should see before making a big investment in 2020.

Tune in to find out more...

In the news from the automobile sector, Union Minister Arjun Ram Meghwal today said his ministry has received 3-4 demands, including suggestion to cut GST rates, from automobile industry body SIAM and has forwarded them to the Finance Minister.

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Addressing the 4th annual SIAM CSR Conclave here, the minister of state for heavy industries and public enterprises asked the auto industry for more suggestions, if any, before the finalisation of the Budget.

The Society of Indian Automobile Manufacturers (SIAM) is a not for profit apex national body representing all major vehicle and vehicular engine manufacturers in India.

How these suggestions are taken forward by the government remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Also, speaking of automobile sector, India's automobile industry is bracing itself for a unique challenge in the first quarter of 2020 when the transition of BS-IV to BS-VI emission norms has to be made at the stroke of midnight on 31 March 2020.

No BS-IV vehicle could be sold from 1 April 2020, which means automakers would have to reduce their inventory on BS-IV models to zero by then.

The exercise is likely to see companies show extra caution in dispatching cars to dealers in the next few months, which may cause a continuation of the decline in wholesale numbers.

However, despite the slowdown in the auto sector, the sales volume of electric vehicles (EVs) are growing at a robust pace.

Sale of Electric Vehicles in India Projected to Go Up 10x in the Next Two Decades

Electric vehicles are very much on their way to invading Indian roads. The threat of disruption in this era is something you cannot ignore.

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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.

Moving on to the news from the banking sector, Yes Bank share price was in focus today after reports suggested that European entities are showing interest in the beleaguered bank.

As per the news, it was reported that European entities are showing interest in the bank as the investors are looking to invest up to US$ 1 billion.

According to report, some entities which are showing interest in the bank have large exposure to Russia, while some investors own banks having exposure in Europe.

The stock of the lender was witnessing buying interest last week amid buzz that the private lender was likely to announce its much-awaited qualified institutional placement (QIP) soon.

Earlier last week, India Ratings and Research (Ind-Ra) had downgraded Yes Bank's Long-Term Issuer Rating from "A+" to "A", owing to inadequate and slow equity infusion. The fresh capital is critical for providing sufficient cushion for the credit cost impact of its stressed asset pool.

Ind-Ra considered equity infusion of US$ 1-1.2 billion in the next few weeks.

In a similar move, ICRA had also downgraded rating on Yes Bank's tier-II bonds from "A+" to "A". The downgrade was on the basis of continued uncertainty regarding the timing and extent of capital raise.

Note that the private bank on December 13 said the third quarter would remain subdued and there would be an improvement in the revenue in the March quarter on the back of government measures.

In a note, Yes Bank said that muted demand environment amid economic slowdown weighed on corporate earnings during the second quarter of 2019-20, with an aggregate revenue recording a contraction of 3.5% year-on-year (YoY) compared to an expansion of 3% in the preceding quarter of the financial year.

How the above developments pan out remains to be seen. 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.


Sensex Trades Marginally Lower; Energy and Telecom Stocks Witness Selling
12:30 pm

Share markets in India have continued to trade on a volatile note and are presently trading marginally lower.

Sectoral indices are trading mixed with stocks in the telecom sector and energy sector witnessing selling pressure, while automobile stocks and metal stocks are witnessing buying interest.

The BSE Sensex is trading down by 40 points, while the NSE Nifty is trading down by 3 points.

The BSE Mid Cap index and the BSE Small Cap index are trading up by 0.2% and 0.1%, respectively.

The rupee is trading at 71.14 against the US$.

In the news from the macroeconomic space, amid factoring in significant deceleration in past few quarters on account of credit squeeze and deterioration in business and consumer confidence, Fitch Ratings has cut its growth forecast for India to 4.6% for the current financial year (FY20) from the previous estimation of 5.6%.

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However, it expects growth to gradually recover to 5.6% in FY21 and 6.5% in FY22 with support from easing monetary and fiscal policy and structural measures that may also support growth over the medium term.

It reaffirmed India's rating at 'BBB-' with a Stable Outlook saying the rating balances a still strong medium-term growth outlook compared with similar category peers and relative external resilience stemming from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural factors, including governance indicators and GDP per capita.

Meanwhile, it said its rating for India incorporates the expectation of moderate slippage in the fiscal deficit target of 3.3% of GDP in FY20.

Besides, the Fitch's FY2020 growth forecast is lower than 4.9% projection by Moody's and 5.1% by Asian Development Bank.

The Reserve Bank of India (RBI) has also revised GDP growth forecast to 5% for FY20 from 6.1% projected in October.

Recently, even ratings agency Moody's Investors Service lowered GDP growth projection for India to 4.9% from 5.8% for FY20.

Note that the Moody's indicator is typically very late to caution on risks. So late in fact, that now it is time to look forward to the upside.

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As our co-head of research, Tanushree Banerjee says, investors who take Moody's downgrade of India too seriously, will either suffer losses or miss the bus on the upside.

Take a look at this chart.

Terrible Track Record of Rating Downgrades

Every time, Moody's has slashed India's rating below the 'stable' category, the economy has bottomed out.

And a stock market boom followed.

So, smart investors who bought stocks after Moody's rating downgrade in 1992 and 2002, created life-changing wealth for themselves.

You need to do the same today.

Moving on to the news from pharma sector. As per an article in a leading financial daily, Glenmark Pharma' subsidiary, Glenmark Pharmaceuticals Inc., USA is voluntarily recalling all unexpired lots of its ranitidine tablets from the US market.

These tablets are used to treat ulcers of the stomach and intestines.

The tablets are being recalled because of the presence or potential presence of N-nitrosodimethylamine (NDMA) levels above the acceptable daily intake levels established by the United States Food and Drug Administration (USFDA).

Reportedly, the affected ranitidine tablets were distributed directly to wholesalers, distributors, retailers and repackagers nationwide.

The company's Ranitidine tablets 150 mg and 300 mg are manufactured at two approved manufacturing facilities. Of the 928 recalled lots of ranitidine tablets, USP, 16 lots were manufactured by Glenmark Pharmaceuticals, Goa, and 912 lots were manufactured by Strides Pharma Science, Puducherry.

At the time of writing, Glenmark Pharma share price was trading up by 0.7% on the BSE.

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 Energy Stocks Lag
09:30 am

Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.6% while the Hang Seng is down 0.1%. The Nikkei 225 is trading flat. US stocks hit record closing highs again on Friday and the S&P 500 registered its biggest weekly percentage gain since early September after data showed a rise in consumer spending and investors continued to be optimistic about developments in the US-China trade dispute.

Back home, India share markets opened flat. The BSE Sensex is trading down by 46 points while the NSE Nifty is trading down by 5 points. The BSE Mid Cap index and BSE Small Cap index opened the day up 0.3% and 0.2% respectively.

Sectoral indices have opened the day on a mixed note with consumer durables stocks and metal stocks witnessing buying interest. Telecom stocks and oil & gas stocks are trading in red.

The rupee is currently trading at 71.17 against the US$.

Speaking of Indian share markets, in the video below, Tanushree Banerjee reveals the right metric to use to find out what the earnings really say about the stock market.

Tune in to find out.

In the news from the financial markets. Ignoring negative sentiments around falling GDP growth rate and some policy roadblocks, foreign portfolio investors seem to have flocked to the Indian capital market in a big way in 2019 with a net inflow of over Rs 1.3 trillion, including Rs 972.5 billion in equities, the highest in last six years.

As the year draws to a close, the debt market has seen a net inflow of nearly Rs 270 billion by FPIs, while a further amount of Rs 90 billion found its way to the hybrid instruments, the reports noted.

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As of now, the foreign portfolio investors (FPIs) have made a net investment of Rs 1.3 trillion (nearly US$ 19 billion) in the Indian markets so far in 2019, while a few days of trading is yet to take place.

While FPIs have made gross purchases worth over Rs 18 trillion so far this year, they have sold securities worth Rs 16.7 trillion across equities, debt and hybrid instruments.

This is the second highest inflow in the last five years and follows a net outflow of close to Rs 810 billion in 2018. In 2017, the net inflow into Indian capital markets had crossed Rs 2 trillion after a net outflow of over Rs 230 billion in 2006.

For equities only, the year passing-by has already seen a net inflow of Rs 972.5 billion, the highest in six years. While the year 2018 saw a net outflow of over Rs 330 billion by FPIs in equities, there was a net inflow of Rs 510 billion in 2017, of Rs 205 billion in 2016, of Rs 178 billion in 2015 and of Rs 970.5 billion in 2014.

FPIs started the year on a negative note and pulled out over Rs 42 billion from equities in January, but turned net buyers in February and the positive momentum continued till June.

However, FPIs turned net sellers in July & August and pulled out over Rs 30 billion after the government announced a super-rich tax, which also impacted foreign funds.

Besides, global cues turned unsupportive. Further, brewing tension between US and Iran, an escalating US-China trade war and fears of slowing global growth created a risk-off sentiment, which did not augur well for emerging markets like India.

Reversing their selling spree, FPIs once again turned net buyers in September and the momentum continued till November after the government announced steps to boost the economy and spur investments.

FPIs would continue to be watchful of the domestic environment and tread cautiously. We will keep you updated on the developments from this space.

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Note that, in March this year, the Morgan Stanley Capital International (MSCI) announced it would increase the weightage of Chinese A shares (stocks trading in mainland China) by 4 times. These shares form around 10% of total Chinese shares in the index.

FPIs investing in passive funds follow the MSCI EM index for investments in emerging markets.

A comparison of India's weightage with China in the MSCI EM index provides us clues on the recent outflows from FPIs.

It also explains the announcement to reduce promoter shareholding in the budget.

Will India be the Next Hot FPI Destination?

Will India be the Next Hot FPI Destination

Will we see a similar FPI inflow into Indian stocks?

Looking at the recent inflow into the Chinese stock markets, it seems very likely.

Moving on the news from pharma sector. As per an article in a leading financial daily, Cadila Healthcare announced that the United States Food and Drug Administration (USFDA) cleared its Gujarat facility.

According to the report, the USFDA issued no observation (483) at the completion of the inspection that concluded on December 20.

The inspection was going on since December 16 at the company's topical manufacturing facility in Ahmedabad.

Issuance of no observation means that the company has successfully cleared the inspection on all aspects.

Cadila Healthcare share price opened the day up by 1.1%.

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


RBI's Operation Twist, Developments in the IPO Space, and Top Cues in Focus Today
Pre-Open

Share markets in India witnessed volatile trading activity on Friday and ended on a flat note.

At the closing bell on Friday, the BSE Sensex stood higher by 8 points while the NSE Nifty closed up by 12 points. The BSE Mid Cap index ended up by 0.2%, while the BSE Small Cap index ended down by 0.1%.

Sectoral indices ended on a mixed note with stocks in the healthcare sector, automobile sector and energy sector witnessing selling pressure, while consumer durable stocks and telecom stocks witnessed buying interest.

Speaking of Indian share markets, in the video below, Rahul Shah talks about the one important chart all investors should see before making a big investment in 2020.

Top Stocks in Focus Today

From the pharma sector, Lupin share price will be in focus today as the company's alliance partner Concord Biotech has received the United States Food and Drug Administration (USFDA)'s approval for Mycophenolic Acid delayed-release tablets USP, 180 mg and 360 mg.

Mycophenolic Acid tablets are indicated for prophylaxis of organ rejection in adult patients receiving kidney transplants and in pediatric patients.

The drug had an annual sale of approximately US$174 million in the US. (IQVIA MAT September 2019).

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Lupin has also launched Doxercalciferol injection, 4 mcg/2 ml (2 mcg/mL) multi-dose vials, having received an approval from the USFDA earlier.

The drug is indicated for the treatment of secondary hyperparathyroidism in adult patients with CKD on dialysis.

According to IQVIA, Doxercalciferol lnjection had an annual sale of US$132 million in October 2019.

From the finance sector, Bajaj Finance share price will also be in focus today as the company last week said it has invoked 2.4 million pledged shares of Karvy Data Management Services (KDMSL) to recover outstanding dues from a group firm.

Bajaj Finance in a regulatory filing said, "the shares of KDMSL were pledged with the company for securing the outstanding dues of Karvy Stock Broking (KSBL), the borrower company. The company has invoked the pledged shares of KDMSL for recovery of its dues."

The company invoked 2.4 million equity shares of face value of Rs 10 each representing 10% of the paid-up share capital of KDMSL.

RBI Commences India's Version of Operation Twist

The Reserve Bank of India (RBI) has commenced something that is akin to the famous "Operation Twist" conducted by the US Federal Reserve by deciding to buy the long-tenor 10-year benchmark bonds worth Rs 100 billion and selling four short-dated securities worth the same amount under open market operations (OMOs).

On Thursday, the RBI said it would be buying the 6.45% yielding notes maturing in 2029 and would be selling four papers maturing in 2020.

The OMOs would be conducted on Monday.

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The step is liquidity neutral, meaning the OMOs would not be adding any further liquidity to the system that is already flush with excess liquidity to the tune of over Rs 2 trillion.

The simultaneous purchase and sale of securities would also help in flattening the steep yield curve, where long tenor yields have been high and short-term yields have been low.

For instance, despite a 60-bps reduction in the repo rate across two monetary policies in August and October, the benchmark yield remains higher by 38 basis points since August. At the same time, the system liquidity has been so high that short-tenor yields have remained fairly low. In some instances, even the 364-day treasury bill yield has gone below the repo rate, a not so usual occurrence.

During the December monetary policy when the RBI governor was asked about the possibility of an Operation Twist, he did not make any specific comments on the matter.

As per some reports, the central bank may do more of these OMO purchases/sales in coming times that will eventually bring down excess supply of long-tenor bonds in the market.

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

From the IPO Space...

Private equity firm Oman India Joint Investment Fund (OIJIF) has picked up a 5% stake in Prince Pipes and Fitting for Rs 1 billion in the initial public offering (IPO) of the company that concluded last week.

The PE investor, which counts Oman's sovereign wealth fund State General Reserve Fund of Oman and India's biggest lender State Bank of India as its sponsors, picked up the stake through participation in the anchor allocation one day ahead of the opening of the IPO, as well as through a secondary purchase of shares from the company's promoters.

Documents filed by the company show that OIJIF invested Rs 0.5 billion in the anchor book of Prince Pipes IPO, while it bought the remaining stake worth Rs 0.5 billion in a secondary purchase from promoters.

Prince Pipes and Fittings is one of India's leading pipe and fitting manufacturers.

It has 5% share in the organized market and was the sixth largest player in terms of sales at the end of FY19.

The fresh issue money and proceeds from the pre-IPO placement would be used for repayment of certain outstanding loans, financing the project cost towards establishment of a new manufacturing facility and upgradation of equipment at company's manufacturing facilities.

Ankit has shared a detailed note on this IPO with his readers at Insider. You can read the same here (subscription required): Prince Pipes and Fittings: Another Rs 500 Crore IPO

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