Indian Indices Trade Marginally Lower; Oil & Gas and Realty Stocks Under Pressure

Mon, 8 Apr 12:30 pm

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Share markets in India are presently trading on a negative note. Sectoral indices are trading mixed with stocks in the realty sector and oil & gas sector witnessing maximum selling pressure while power stocks and telecom stocks are witnessing buying interest.

The BSE Sensex is trading down by 69 points (down 0.2%), while the NSE Nifty is trading down by 32 points (down 0.3%). The BSE Mid Cap index and the BSE Small Cap index are trading down by 0.2%.

The rupee is currently trading at Rs 69.52 against the US$.

Speaking of Indian share markets, after the dream bull market of 2017, 2018 turned out to be a wet blanket.

Small and mid-cap stocks were the first ones in the line of fire, and also the worst hit.

The benchmark indices, however, managed to hold on longer. The Sensex even went on to hit an all-time high around the end of August. But the Indian markets fell sharply during September, triggered by the unfolding of the IL&FS crisis. The market correction got worse in October as the US-China trade-war tensions and liquidity tightness in the domestic NBFC sector severely dented market sentiment.

In November 2018, the markets attempted a short-lived turnaround, but it wasn't enough to bring back the bulls.

Subsequently, the markets treaded in an indecisive zone.

But since March 2019, the Indian markets have rallied sharply. As a result, India managed to outperform most of the other major economies during the second half of the financial year 2018-19 (H2: 2018-19).

The below chart shows the performance of some of the major world economies during H2: 2018-19 in dollar terms.

Indian Stock Markets Outperform Most Peers

Here's what Ankit Shah wrote about it in today's edition of The 5 Minute WrapUp...

• From October 2018 to March 2019, the BSE Sensex increased by 6.8% in rupee terms and 11.7% in dollar terms.
  
  Brazil, Indonesia and China are the only other major economies that did better than India during this period.

So, do you think the trend will continue going forward? Look out for the stocks that will rise fast when the tide of the market turns up.

In the news from the aviation space, Jet Airways has delayed repayments worth more than US$ 18 million to global lenders including Citibank that financed its purchase of Boeing 777 planes.

As per an article in The Economic Times, the banks had lent on the back of guarantees from Export-Import (EXIM) Bank of the US which can be invoked if there is a default.

Here's an excerpt from the article:

• Under the circumstances, a guarantee invocation could sound the death knell for Jet as the US institution would likely deregister and then repossess the planes.
  
  EXIM Bank, the official export credit agency of the US, is the biggest backer of Boeing's exported planes. In a presentation detailing the latest revival and fund infusion plan for Jet, payments to EXIM Bank were estimated at Rs 1,433 crore.

The debt-laden airline has requested these foreign lenders to condone the payment delay. It has asked for time as local banks are trying to put together a resolution plan.

Local banks, led by State bank of India (SBI), are yet to disburse Rs 15 billion they had assured. Reports state that the banks are ready to give loan, but they would be more comfortable in disbursing fund if there is equity infusion by Etihad or some other investor. But no investor has given any firm commitment.

The airline is struggling to survive each day as it has defaulted on loan payments, delayed payment to vendors, deferred salaries for at least three months, and grounded planes.

Jet first defaulted on loan payments to its domestic lenders in December 2018. On March 18, it again announced it would miss a bond interest payment due the next day because of "temporary liquidity constraints".

On March 28, it said repayment of external commercial borrowings availed for working capital loans would be delayed. It has a total outstanding debt of Rs 85 billion on its books.

Last week, state-run oil refiner Indian Oil Corporation (IOC) cut jet fuel supplies to the airline on a few instances ranging from 30 minutes to an hour, forcing the airline to stop operations in those intervals.

Jet Airways share price is presently trading up by 2.1%.

Moving on to the news from the energy sector, Gujarat Gas share price is witnessing buying interest today after the company announced that it has received a grant of authorization for city gas distribution networks.

The Petroleum and Natural Gas Regulatory Board (PNGRB) has issued a letter dated March 29, 2019 for laying, building, operating or expanding the city or local natural gas distribution network (CGD network) in the geographical areas of Sirsa, Fatehabad and Mansa (Punjab) districts.

Buying is also seen as rating agency Indian ratings and Research revised the company's outlook to 'Positive' from 'Stable' while affirming its long-term issuer rating at 'IND AA'.

Gujarat Gas has an annual capital expenditure plan of Rs 4.5 billion for network expansion with scheduled debt repayments of Rs 1 billion - Rs 1.2 billion each year over FY19-FY20.

Shares of the company have rallied around 15% in the past 3 trading days on back of the above news.

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