Sensex Crashes 807 Points on Coronavirus Fears; Metal and Automobile Stocks Fall

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Indian share markets fell sharply today, tracking a global selloff as coronavirus cases spiked outside China.

All sectoral indices ended on a negative note, with stocks in the metal sector, automobile sector and telecom sector, leading the losses.

At the closing bell, the BSE Sensex stood lower by 807 points (down 2%) and the NSE Nifty closed down by 242 points (down 2%).

The BSE Mid Cap index and the BSE Small Cap index ended the day down by 1.6%.

Asian stock markets finished on a negative note as investors fret over the spread of coronavirus around the world. During the weekend, South Korea put the country on high alert while the number of infections jumped to over 700 and deaths rose to seven.

In China, the virus has killed over 2,400 and reported 76,936 cases, and slammed the brakes on the world's second-largest economy.

As of the most recent closing prices, the Hang Seng was down by 1.8% and the Nikkei stood lower by 0.4%.

The rupee is trading at 71.86 against the US$.

US President Donald Trump arrived in Ahmedabad today for the first leg of his maiden India trip.

Addressing the 'Namaste Trump' event at the Motera Stadium in Gujarat's Ahmedabad, Trump announced that the US will seal defence deals worth US$ 3 billion on Tuesday.

Trump also asserted that relations with India hold a special place for his country, saying that America loves and will always be loyal to India.

In news from the telecom sector, Bharti Infratel has extended the deadline for completion of the company's merger with Indus Towers in order to comply with certain conditions, despite the government's nod for FDI enhancement on Friday.

The department of telecommunications (DoT) on Friday approved the merger of telecom tower companies Bharti Infratel and Indus Towers.

Bharti Airtel and Vodafone Idea are customers of the two tower companies.

The approval had come days after a series of meetings between Vodafone Idea chairman Kumar Mangalam Birla and top government officials.

Birla met telecom secretary Anshu Prakash on Tuesday, and followed it up with a meeting with finance minister Nirmala Sitharaman on Wednesday, to share his concerns over the possibility of DoT invoking bank guarantees of the telecom operator.

Note that this is the third deadline extension for the merger. Bharti Infratel's board had allowed two extensions of the long stop date, first on 24 October and then on 24 December to secure more time for the approval.

Vodafone Idea has a 11.15% stake in Indus Towers, which it plans to monetise after the tower merger and this stake sale could fetch Vodafone Idea about Rs 45 billion.

How this merger 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 banking sector, SBI Cards & Payment Services, backed by State Bank of India (SBI) and private equity firm Carlyle Group, is likely to beat some of the largest companies by market value after listing next month.

The IPO is expected to be priced in the Rs 750-755 range. At the upper limit of this price band and including the fresh issue, SBI Cards may command a market capitalisation of just over Rs 700 billion on listing.

As per an article in The Economic Times, 16 Nifty stocks had market capitalizations lower than Rs 700 billion as of Friday. Among them were JSW Steel (Rs 680 billion), Mahindra & Mahindra (M&M), Dr Reddy's Labs (Rs 540 billion), GAIL (Rs 538 billion) and Tata Steel (Rs 534 billion).

The IPO of the second-largest credit card issuer in the country will remain open for four days in anticipation of high investor appetite. On the fourth day, the subscription will remain open exclusively for retail and non-institutional investors, while qualified institutional buyers can bid for the offer during the first three days.

Reportedly, a one-day extension was provided because the Unified Payments Interface (UPI) mechanism is the only option available for retail investors applying for IPOs through intermediaries.

Incorporated in 1998, SBI Cards is the second-largest credit card issuer in India, with an 18% market share of the credit cards market in terms of the number of cards outstanding.

HDFC Bank has the largest credit cards business in the country with 13.3 million cards issued, while ICICI Bank stood third with 7.9 million credit cards, according to data from the Reserve Bank of India.

SBI Card's total credit card spends grew at a compounded annual growth rate of 54.2% over FY17-FY19 compared with an industry average of 35.6%.

Speaking of the credit card business, a quick look at India's credit card spending is a good indicator of the country's consumption potential.

Have a look at the chart below:

India's Massive Consumption Megatrend

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

• Credit card spending in India has clocked a rapid 32% annual growth rate over the last 5 years. I expect this trend is expected to continue for many years.
  
  India's young demographic and rapid urbanisation will be the driving force of this consumption megatrend.
  
  This is a megatrend worth watching. Stocks of companies that cater to this theme will benefit in the long run.

This is one of the megatrends that will help what Tanushree calls the Rebirth of India.

She has identified the 7 best stocks that will profit from the Rebirth of India. You can read about these top 7 stocks here.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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