Weak Start to the Week

Mon, 2 May Closing

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Indian benchmark indices languished in the red through the entire trading session today amid weak Asian markets and heavy losses in Japan as the yen surged against the dollar. At the closing bell, while the BSE Sensex closed lower by 170 points, the NSE Nifty finished lower by 44 points. However, Midcaps and Smallcaps bucked the trend and finished on a positive note. The S&P BSE Midcap finished up by 1.1%, while the S&P BSE Small Cap finished up by 0.4%. Losses were largely seen in banking and realty stocks.

Asian markets finished broadly lower today with shares in Japan leading the region. The Nikkei 225 is down 3.11%, while Hong Kong's Hang Seng is off 1.50% and China's Shanghai Composite is lower by 0.25%. European markets are trading higher today as French and German shares show gains. The CAC 40 is up 0.31%, while the DAX is up 1.06%. The British FTSE 100 is closed.

The rupee was trading at 66.34 against the US$ in the afternoon session. Oil prices were trading at US$ 45.52 at the time of writing.

Shares of Yes Bank finished the trading day on an optimistic note (up 0.3%) after it was reported that Reserve Bank of India (RBI) has allowed foreign investors to buy up to 60% stake in the bank. Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest from existing 49% up to 60% under the Portfolio Investment Scheme (PIS). Further, the total foreign investment from all sources, i.e. Global Depository Receipts (GDRs) / American Depository Receipts (ADRs) / Foreign Direct Investment (FDI) / / RFPIs / Non-Resident Indians (NRIs) / Persons of Indian Origin (PIO) in the bank shall not exceed 60%.

Separately, the bank has also made an application to the FIPB for increasing the total foreign ownership limit to 74%. FIPB, vide its meeting dated March 07, 2016, has recommended this proposal to the Cabinet Committee of Economic Affairs (CCEA) for approval.

In the six months to April, Yes Bank has also reportedly raised and lent US$225 million of foreign currency loans to foreign subsidiaries of Indian companies and their joint ventures abroad and expects to more than double it in the full fiscal year ending March 2017.

Yes Bank reported its results for the quarter ended March 2016 . The company's net profit grew by 27.4% YoY during the quarter to Rs 7 billion. Reportedly, the healthy growth was on account of improving loan demand, higher net interest and other income. However, there was a slight slippage in the asset quality owing to Reserve Bank of India's (RBI) directive to recognize visible stressed assets. At an absolute level, gross non-performing assets (NPAs) grew by 139% to Rs 7.4 billion. As a percentage of total loans, gross NPAs stood at 0.76%.

Banking stocks languished in red today with PNB and ICICI Bank bearing majority of the brunt.

Moving on to news from the automobile sector. Shares of Bajaj Auto finished in red (down 0.2%) after the company registered fall of 2% in total sales to 330,109 units in April 2016 against 336,274 units in April 2015. The company has reported 24% fall in commercial vehicles sales to 38,211 units in April 2016. The company's total exports out of the above stood at 103,976 units, a fall of 36% as compared to 161,598 units sold in the corresponding month last year.

While, Ashok Leyland has reported an increase of 21% in April 2016 sales to 10,180 units as against 8,435 units sold in the same period of last year. The company has experienced a jump of 20% in its medium and heavy commercial vehicle (M&HCV) products segment to 7,871 units in April 2016 as compared to 6,549 units in March 2015. The company's light commercial vehicle (LCV) segment witnessed a rise of 22% to 2,309 units in April 2016.

The script of Ashok Leyland finished the trading day down by 0.8% on the BSE. The stock has moved up by more than 30% in the past one year. In a recent edition of The 5 Minute WrapUp Premium, we have discussed the performance of Ashok Leyland (Subscription Required) in recent times.

Automobile stocks finished the day on a positive note with Escorts Limited and Tube Investments of India leading the gains.

FY16 turned out to be a disappointing year for the Indian auto industry. The only segment that managed to grow in double digits was commercial vehicles (CVs). But this was largely led by medium & heavy CVs.