Sensex Trades Marginally Lower; IndusInd Bank & Yes Bank Top Losers

Fri, 28 Jun 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 telecom sector and metal sector witnessing selling pressure while capital goods stocks and healthcare stocks are trading in green.

The BSE Sensex is trading down by 112 points (down 0.3%), while the NSE Nifty is trading down by 34 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 68.91 against the US$.

Speaking of Indian share markets, when it comes to stock market performance, multinational corporations (MNCs) have outperformed the broader market.

The Nifty has a MNC index. This index comprises 15 listed companies. The foreign shareholding in them is over 50% and/or the management control is vested in the foreign company.

As can be seen in the chart below, this Nifty MNC Index has outperformed the Nifty 50 index in the last five years.

Nifty MNC Index Outperforms the Benchmark Index

Why the outperformance?

Sarvajeet Bodas answers this question in the recent edition of The 5 Minute WrapUp. He writes...

• Generally, MNCs have a vast global experience. These companies have weathered the competition in many markets across the world.
  
  Also, MNCs generally have strong parentage. This helps create strong brands and gain market share.
  
  Not to mention MNCs have strong balance sheets. This brings stability during times of market volatility.
  
  Similarly, in the past, MNCs have demonstrated good capital allocation. Hence they, consistently delivered high returns on capital.
  
  Finally, MNCs typically have high standards when it comes to board composition, corporate governance, and operational efficiency. All this helps to maximise shareholder wealth.

In Smart Money Secrets, we have recommended such a company from the MNC space.

If you haven't subscribed to Smart Money Secrets yet, you can access the report by signing up here.

In the news from the engineering sector, Larsen and Toubro Ltd (L&T) has gained a controlling interest in Mindtree, raising its stake to 60% and successfully concluding India's first hostile takeover of a software developer.

L&T completed buying the 31% additional stake it targeted to acquire in Mindtree for Rs 49.9 billion through an open offer as large investors rushed to sell their holdings.

The offer to purchase 50.9 million shares of Mindtree from public shareholders was subscribed 1.2 times on Wednesday.

Almost all the large institutional investors in Mindtree have sold their stakes to L&T in the open offer including Singapore-based Nalanda Capital (10.61%), UTI Mutual Fund (2.97%), and Amansa Holdings Pvt. Ltd (2.77%).

L&T share price is presently trading up by 1%, while Mindtree share price is trading down by 1.7%.

In the news from the realty sector, DLF share price is witnessing buying interest today after its promoters infused Rs 22.5 billion in the company against the issuance of new equity shares.

The new infusion came through two holding entities including Rajdhani Investments & Agencies and DLF Urva Real Estate Developers & Services which has taken the promoters' collective stake to 75% in the company.

Company's board has now allotted 138.1 million equity shares at Rs 217.3 each against the convertible debentures. Earlier in May, the board had issued 130 million shares at the same rate. The promoters will now have 268.1 million new equity shares in their possession since March 31 with the current infusion.

In December 2017, the promoters had infused Rs 90 billion into the company and promised to invest an additional Rs 22.5 billion.

The fund infusion was made after the promoters sold their entire stake in DLF's rental arm DLF Cyber City Developers Ltd for Rs 119 billion.

In the March quarter, the company had said it reduced its net debt to Rs 44.8 billion from Rs 72.2 billion in the December quarter, with the help of funds raised from selling shares to institutional investors.

Moving on, shares of Cox & Kings were locked in 10% lower circuit for the third straight day after the company defaulted on commercial paper worth Rs 1.5 billion.

Data on the exchanges showed that there were pending sell orders for 5.2 million shares, representing 3% of total equity capital.

The company, which runs the tours and hotels business in India and abroad, was trading at an all-time low of Rs 36.5, plummeting 40% in past one week.

In a regulatory filing on Wednesday, the company said "about Rs 2 billion was due for repayment to two investors holding the company's unsecured commercial paper. Of the aggregate amount, Rs 1.5 billion has not been paid".

Reports state that the company plans to clear all its debt obligations, arising due to cash flow mismatch and a rating downgrade, through a combination of internal accruals and monetization of assets.

Earlier this week, rating agency Brickwork ratings downgraded the company's Rs 500 - million non-convertible debentures (NCDs), while retaining its commercial paper rating. On June 11, CARE Ratings had also downgraded its rating.

Stay tuned for more updates from this space.

And 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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Indian Share Market Update: Top Gainers and Losers