Sensex Opens Flat; Yes Bank Crashes 25% on Poor Q4 Result

Tue, 30 Apr 09:30 am

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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 0.5%. The Nikkei 225 is trading down by 0.2%. Meanwhile, the S&P 500 set an intraday record high on Monday, bolstering the view that the decade-long bull market has further to run, after consumer spending rose in March and inflation data was benign.

Back home, India share markets opened on a flat note. The BSE Sensex is trading down by 28 points while the NSE Nifty is trading down by 24 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.6% and 0.4% respectively.

Sectoral indices have opened the day on a mixed note with energy and FMCG stocks trading in green. Realty stocks and bank stocks are witnessing maximum selling pressure.

The rupee is currently trading at 69.82 against the US$.

After the dream bull market of 2017, 2018 turned out to be a wet blanket.

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

Indian Stock Markets Outperform Most Peers

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.

Will the trend continue going forward? Let's wait and watch...

In the news from the banking sector. Yes Bank posted a net loss of Rs 15.1 billion in the fourth quarter of FY19 as provisions jumped more than eight-fold.

It had registered a net profit of Rs 11.8 billion in the quarter ended March 2018, although its net profit for the third quarter of last fiscal fell by about 7% annually.

This is probably the first net loss for the private sector lender since 2004. The bank's provisions shot up to Rs 36.6 billion for the January to March 2019 quarter, against Rs 4 billion in the same period a year ago.

For the full fiscal 2018-19, the bank posted a net profit of Rs 17.2 billion, against Rs 42.2 billion in 2017-18.

For the quarter ended March 2019, YES Bank's net interest income grew by 16% to Rs 25.1 billion, against Rs 21.5 billion. Its net interest margin was at 3.1% for the fourth quarter of the fiscal and 3.2% for FY19.

Non-interest income, however, fell by over 62% to Rs 5.3 billion for the fourth quarter of the fiscal, against Rs 14.2 billion a year ago.

The bank's gross non-performing assets also shot up to Rs 78.8 billion as on March 2019, or 3.2% of gross advances, against 1.3% a year ago. Net NPAs also rose to Rs 44.8 billion as on March 2019, or 1.9% of net advances, against 0.6% as on March 2018.

Yes Bank share price crashed over 25% in the opening session.

Moving on to the news from pharma sector. As per an article in a leading financial daily, Dr Reddy's Laboratories is recalling 33,958 bottles of Divalproex Sodium Extended-Release tablets, used to treat seizure disorders, from the American market.

Besides, InvaGen Pharmaceuticals Inc, a subsidiary of Cipla, is recalling over 7.8 lakh vials of Testosterone Cypionate injection.

Dr Reddy's Laboratories Inc, a subsidiary of Dr Reddy's Laboratories, is voluntarily recalling the affected lot of bottles on account of certain deviations from the Current Good Manufacturing Practice (CGMP) regulations.

As per the latest enforcement report by the US Food and Drug Administration (USFDA), the firm is recalling the product as it has been exposed to above 50% relative humidity levels during packaging operations.

The product was supplied to major distributors and retailers who may have further distributed the product throughout the US.

Meanwhile, InvaGen Pharmaceuticals Inc is recalling its product in various strengths due to the presence of particulate matter.

The vials were manufactured by Cipla at its Verna facility in Goa for Cipla USA Inc.

The USFDA has classified both the recalls as a Class-II recall, which is initiated in a situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.

Cipla opened down by 0.3%, while Dr. Reddy's Lab opened the day up by 0.7%.

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