Sensex Slips Over 150 Points; Tata Steel & Tata Motors Top Losers

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Share markets in India are presently trading on a negative note. Barring FMCG sector, all sectoral indices are trading in red with stocks in the capital goods sector, telecom sector and metal sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 156 points (down 0.4%), while the NSE Nifty is trading down by 44 points (down 0.4%). The BSE Mid Cap index and the BSE Small Cap index are trading down by 0.4%.

The rupee is trading at Rs 68.51 against the US$.

Market participants are tracking TCS share price as the company reported a net profit of Rs 81.3 billion, a 10.8% rise over the corresponding period of the previous financial year.

Sequentially, the rise was marginal. During the April-June period, the Mumbai-based firm reported an 11.4% rise in revenue at Rs 381.7 billion on a year-on-year (YoY) basis while it was 0.4% higher over the preceding quarter.

To know more about the company, you can read TCS Q1FY20 result on our website.

In news from the aviation space, shares of InterGlobe Aviation (IndiGo) crashed 19% in early trade today as one of the promoters Rakesh Gangwal approached markets regulator over alleged corporate governance issues at the airline.

As per an article in The Economic Times, Gangwal alleged that a shareholders' agreement gave Rahul Bhatia unusual controlling rights over the company. Gangwal held 36.7% stake in the airline as of the latest filing. Co-promoter Rahul Bhatia, on the other hand, owned 38% stake in the airline.

He suspected that the rights and a lack of diversity and paucity of independent directors may be at the root of why governance matters have taken a back seat at IndiGo.

Here's an excerpt from the article:

• Gangwal has sought permission to hold an extraordinary general (EGM) meeting, alleging that the company has participated in objectionable related-party transactions (RPTs) and has not complied with corporate governance standards.
  
  In a 23-page letter to Ajay Tyagi, market regulator's chairman, Gangwal wrote besides questionable RPTs, fundamental governance norms and laws were not being adhered to and this would lead to "unfortunate outcomes" unless correctives were applied. Corporate governance regulations prescribed by regulator as well as those of the company's code of conduct for directors and the senior management have been violated.

Bhatia, on the other hand, has denied the charge, saying that the Companies Act gave the powers to the board of the company to decide its functioning.

Shares of the company hit their lowest levels since March on back of the above news and were on course for their worst day since January 2016. Around 7.3 million shares of IndiGo changed hands on the exchanges.

Moving on to news from the banking sector, State Bank of India (SBI) has lowered its lending rates by 5 basis points (bps) across all tenors, with effect from July 10, 2019.

The one-year marginal cost of funds-based lending rate (MCLR) or minimum lending rate, to which all loans are linked, has been cut to 8.40% from 8.45% earlier.

The lender has also cut the overnight, 1 month, 3 months 6 months MCLRs to 8.05%, 8.05%, 8.10%, and 8.25%, respectively. Further, two years and three years MCLRs has been reduced to 8.50% p.a. and 8.60% per annum.

Meanwhile, Oriental Bank of Commerce revised one-year MCLRs to 8.65% per annum from 8.70%.

Speaking of the banking sector, it was reported last week that the Scheduled commercial banks (SCBs) credit growth moderated to 12% YoY compared with 12.7% growth in May 2019. The credit growth has improved from 10.9% at end June 2018.

Co-head of Research at Equitymaster, Tanushree Banerjee believes retail and corporate credit are expected to grow by multi-fold over the next few years.

Rising Credit Growth in India

Here's what she wrote about it in a recent edition of The 5 Minute WrapUp...

• One theme I strongly believe will play out over the next decade is the credit growth in India.
  
  The growth I foresee will be due to two reasons. Expanding GDP and credit penetration.
  
  Recent reforms like Jan Dhan, Mudra Yojna have helped Small and Medium Enterprises (SME's) and self-employed professionals to gain access to loans.
  
  Credit penetration is also expected to increase in this segment from current levels.
  
  Over the past few years, a lot of banks and NBFCs have started lending to this segment.

So look out for strong well-established financial services players which will benefit the most from this trend.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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