Indian Indices Witness Buying, March Quarter Results, Moody's Growth Forecast for 2020, and Top Cues in Focus Today

Thu, 30 Apr Pre-Open

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Indian share markets rose to their highest level in more than six weeks yesterday and ended on a strong note.

Extending gains to the third consecutive day, benchmark indices rose sharply in the last hour of trade yesterday. Buying interest was seen tracking positive cues from Asian stock markets and amid heavy buying in metal and automobile stocks.

At the closing bell yesterday, the BSE Sensex stood higher by 606 points (up 1.9%) and the NSE Nifty closed higher by 172 points (up 1.8%).

The BSE Mid Cap index and the BSE Small Cap index ended their day up by 1%.

On the sectoral front, gains were largely seen in the metal sector, finance sector and automobile sector.

Speaking of Indian share markets and the coronavirus sell-off, our special report, How to Trade the Coronavirus Crash, is the most comprehensive report on how to trade the coronavirus, both from a short-term and long-term perspective. You can claim your FREE copy here...

Top Stocks in Focus Today

From the chemical sector, IOL Chemicals & Pharma share price will be in focus today as the company has been recognized as a Three Star export house by the Ministry of Commerce & Industry, Government of India and accordingly a Three Star Export House recognition certificate has been issued to the company. The certificate shall be valid for a period of five years. This will facilitate the company to expand its product portfolio in the foreign market.

From the banking sector, Axis Bank share price will be in focus as the private lender posted a loss of Rs 13,877.8 million in the quarter ended March 31, 2020, hit by a spike in provisions and contingencies.

The bank had a net profit of Rs 15,050.6 million in the same period last year. The bank made massive Rs 77.3 billion provisions in Q4FY20, of which Rs 30 billion worth provisions were due to coronavirus uncertainty.

Axis Bank also announced a joint venture with Max Financial Services (MFS), to become joint venture partners in Max Life Insurance.

Moreover, the private lender's board approved a proposal to borrow funds in Indian or foreign currency up to Rs 35 billion.

Market participants will also be tracking Hexaware Technologies share price as the company announced its March quarter result (Q4FY20).

You can read our recently released Q4FY20 results of other companies here: Wipro, TCS, Infosys, HDFC Bank, Tata Elxsi, ACC, CRISIL, Mindtree, Ambuja Cement, IndusInd Bank.

Franklin Templeton Fiasco: High Exposure Towards NBFC and ARC Companies

As per a leading financial daily, the six wound-up debt schemes of Franklin Templeton Mutual Fund (MF) have concentrated exposures to certain companies belonging to sectors such as non-banking financial companies (NBFCs), asset reconstruction companies (ARC) and renewables.

As per the article, three of the wound-up schemes have 9-10% exposure to Shriram Transport which saw its long-term issuer rating downgraded by Fitch Ratings recently.

The company's debt papers held by Franklin are graded by domestic rating agency Crisil, which is yet to revise its ratings on these papers.

Franklin Low Duration Fund had 10.8% of its assets exposed to JM Financial Asset Reconstruction company (ARC).

Another NBFC, which accounts for a larger share of Franklin's wound-up schemes is Piramal Enterprises, along with its subsidiary Piramal Capital & Housing Finance.

The article also states that about Rs 80.8 billion of the exposures of the six wound-up schemes are set to mature within the next 12 months.

Note that Franklin Templeton Mutual Fund on 23 April said it was shutting down six of its yield-oriented managed credit funds with total assets under management of Rs 258.6 billion, owing to severe illiquidity and redemption pressures induced by the covid-19 pandemic.

Speaking of mutual funds, Ajit Dayal, founder of Quantum group, talks about the corruption in the Indian mutual fund industry, in his latest article.

You can read the same here: Black swans, Black crows and Fund lies

Vijay Bhambwani has also recorded a video on the analysis of the situation and his recommendation for debt fund investors. You can check the same here: What the Franklin Templeton Fiasco Means for Traders

Moody's Slashes India's Growth Forecast to 0.2% for 2020

Moody's Investors Service slashed India growth forecast for calendar year 2020 to 0.2%, from 2.5% projected in March.

For 2021, Moody's expects India's growth to rebound to 6.2%.

Asper the report, Moody's has lowered G-20 advanced economies as a group to contract by 5.8% in 2020.

Moody's said the economic costs of coronavirus crisis amid the near shutdown of the global economy are accumulating rapidly.

How these estimates pan out remains to be seen in the coming months. Meanwhile, we will keep you updated on all the developments from this space.

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.

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.

Here's a snippet of what she wrote in one of the editions of The 5 Minute WrapUp:

• Take advantage of the negativity in the stock market and buy the best stocks that are poised to ride India's economic recovery.
  
  The Moody's rating downgrade will not affect the Rebirth of India at all.
  
  It will also not affect my pick of the 7 best stocks in the market.
  
  The ratings downgrade could only serve my readers, like you, to buy these stocks at valuations that are favourable.
  
  And don't be in a hurry to see markets soar.
  
  Stay assured that the Moody's rating downgrade is a final indicator of an inflection in India's economic and stock market potential.
  
  It is a sign to buy.

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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