Sensex Opens Lower; Yes Bank Falls Over 10%

Thu, 18 Jul 09:30 am

   Previous Close   

   Pre-Open   

   12:30 pm   

   Closing   

Asian share markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 1.6% while the Hang Seng is down 0.4%. The Shanghai Composite is trading down by 0.6%. Meanwhile, the US stocks closed lower as investors digested a batch of earnings reports. In overnight trade, the Dow Jones Industrial Average index was down 116 points. The S&P500 index fell 20 points. The Nasdaq Composite index decreased 38 points.

Back home, India share markets opened the day on a negative note. The BSE Sensex is trading down by 96 points while the NSE Nifty is trading down by 37 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.3% and 0.2% respectively.

Barring telecom stocks, all sectoral indices have opened the day in red with metal stocks and automobile stocks witnessing maximum selling pressure.

The rupee is currently trading at 68.77 against the US$.

Speaking of stock markets and gold, gold has always been a staple investment for Indian households.

There are various opinions on what proportion of the portfolio could be allocated to the yellow metal.

Stocks versus Gold Over Past 5 Years

Here's what co-head of research at Equitymaster, Tanushree Banerjee wrote in one of the edition of The 5 Minute WrapUp:

• "the magical metal will be no match for the Indian mettle over the next decade.
  
  So, by all means buy some gold for inflation hedge.
  
  But don't lose sight of the Rebirth of India opportunity."

In the news from the economy. The Bimal Jalan Committee on Economic Capital Framework has suggested that surplus reserves of the Reserve Bank of India (RBI) should be transferred to the government in phases over three-five years.

The final report on Committee on Economic Capital Framework, to be presented before RBI Governor Shaktikanta Das in 15 days, has proposed a formula for the 'nominal' transfer of the RBI surplus reserves.

However, reports also suggest that the committee might not be unanimous on the issue and that Finance Secretary Subhash C Garg, one of the six committee members, has some divergent views on the matter. These objections will also be included in the final report.

The Committee on Economic Capital Framework, which met on Wednesday for the final time, has reportedly recommended transferring of funds from both contingency and revaluation reserves to the government.

However, the panel has also sought a 'period review' of the RBI capital framework.

Further, finance minister Nirmala Sitharaman had budgeted to receive dividends worth over Rs 1.6-trillion from the central bank this year.

The central bank had the total surplus cash reserves of Rs 9.4 trillion as on June 2018.

The transfer of RBI's reserves to the government has been a contentious issue between the two sides for a long time. The government and the RBI under the previous governor Urjit Patel were at loggerheads over the issue of the surplus capital with the central bank.

The finance ministry was of the view that the buffer of 28% of gross assets maintained by the RBI is well above the global norm of around 14%. Following this, the RBI board in its meeting on 19 November 2018, decided to constitute a panel to examine ECF.

In the past, the issue of the ideal size of RBI's reserves was examined by three committees, V Subrahmanyam (1997), Usha Thorat (2004) and Y H Malegam (2013).

While the Subrahmanyam committee recommended that contingency reserve should be built up to 12%, the Thorat committee said the reserve adequacy should be maintained at 18% of the total assets.

The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam panel.

While the markets may over react to this news. But note that rationality dictates that we have a system that works, and our economy is resilient enough. Which is why a significant correction in stocks could be a good opportunity to buy a slice of India's economic future at attractive prices.

As per co-head of research, Tanushree Banerjee, there are some irreversible trends that are already taking the economy in the right direction. And while the markets may be myopic in recognizing such trends, the opportunity is ripe for you to act on them.

This is an opportunity to act on what she calls the Rebirth of India.

Moving on to the news from the banking sector. Yes Bank on Wednesday reported a 91% drop in fiscal-first quarter profit on account of higher provisioning and lower other income.

The management said the bank is looking to raise capital in the ongoing quarter.

The private sector lender posted a net profit of Rs 1.1 billion for the quarter ended 30 June from Rs 12.6 billion a year ago. The bank reported a loss of Rs 15.1 billion in the preceding March quarter.

Asset quality deteriorated, with gross non-performing assets (NPAs) as a percentage of total loans rising to 5% as against 3.2% in the previous quarter.

The bank saw an addition of fresh bad loans worth Rs 62.3 billion in the quarter, even as it upgraded or recovered Rs 16.8 billion and wrote off bad loans worth Rs 3.4 billion.

Of the net slippage of Rs 45 billion, around Rs 25 billion is from the book identified earlier.

The management clarified that the bank's total real estate loans stood at Rs 240 billion, of which 25% has been isolated as sub-investment grade (NPAs). The remaining 75% has minimal slippages, it said.

The higher slippages saw the bank's provisions increase nearly three-fold to Rs 17.8 billion during the quarter as against Rs 6.3 billion the previous year.

This includes a one-off mark-to-market provisioning of Rs 11.1 billion due to rating downgrades of investments in companies of two financial services companies.

On the operations side, the bank's other income, which includes core fee income, dropped 25% to Rs 12.7 billion in the quarter from Rs 16.9 billion a year ago.

Net interest income, or the difference between interest earned on loans and that paid on deposits, increased 2.8% year-on-year (y-o-y) to Rs 22.8 billion from Rs 22.2 billion in the corresponding period last year.

Net interest margin narrowed to 2.8% from 3.1% in the previous quarter on account of interest reversal. The bank's loan book grew 18% y-o-y to Rs 2.4 trillion, led by retail loans. Current and savings account ratio dropped to 30.2% of total deposits compared to 33.1% in the previous quarter while retail term deposits grew 37.7% y-o-y.

Yes Bank share price opened the day down by 10.9%.

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!

Read the latest Market Commentary

Top Gainers TodayTop Gainers over 1-WeekTop Gainers over 1-MonthTop Gainers over 1-YearTop Gainers over 3-YrsTop Gainers over 5-YrsTop Losers TodayTop Losers over 1-WeekTop Losers over 1-MonthTop Losers over 1-YearTop Losers over 3-YrsTop Losers over 5-YrsOnly BuyersOnly SellersMost Active StocksMost Popular Stocks52 Week High Stocks52 Week Low Stocks

INDICESBSE (Rs 0 to 1)BSE (Rs 1 to 2)BSE (Rs 2 to 4)BSE (Rs 4 to 10)BSE (Rs 10 to 20)BSE (Above Rs 20)BSE - AllBSE-30BSE-100BSE-200BSE-500BSE AutoBSE BankexBSE Capital GoodsBSE Consumer DurablesBSE FMCGBSE HealthcareBSE ITBSE MetalBSE Oil & GasBSE PSUBSE TeckBSE RealtyBSE PowerBSE A GroupBSE B GroupBSE Mid-CapBSE Small-CapBSE Basic MaterialsBSE Consumer DiscretionaryBSE IndustrialsBSE UtilitiesBSE Sensex 50BSE Sensex Next 50BSE Bharat 22BSE 150 MidCapBSE 250 SmallCapBSE 250 LargeMidCapBSE 400 MidSmallCapBSE AllCapBSE LargeCapBSE SmallCap SelectBSE 100 LargeCap TMCBSE InfraBSE ManufacturingBSE CPSEBSE Private BankBSE Diversified FinancialsBSE MomentumBSE Low VolatilityBSE QualityBSE Enhanced ValueBSE Divident StabilityS&P BSE IPOBSE SMEIPOBSE 100 ESGBSE CarbonexBSE GreenexNSE (Rs 0 to 10)NSE (Rs 10 to 20)NSE (Above Rs 20)NSE - AllNSE-50NSE ITNSE Nifty Midcap 50NSE JR. NiftyNSE Bank NiftyNIFTY Next 50NIFTY 100NIFTY 200NIFTY 500NIFTY MidCap 100NIFTY SmallCap 250NIFTY SmallCap 50NIFTY SmallCap 100NIFTY LargeMidCap 250NIFTY MidSmallCap 400NIFTY AutoNIFTY Consumer DurablesNIFTY FinanceNIFTY FMCGNIFTY MediaNIFTY MetalNIFTY PharmaNIFTY Private BankNIFTY PSU BankNIFTY RealtyNIFTY Oil & GasNIFTY SME EmergeNIFTY CommoditiesNIFTY CPSENIFTY EnergyNIFTY India ConsumptionNIFTY InfraNIFTY MNCNIFTY PSENIFTY Serv SectorNIFTY100 Liquid 15NIFTY Midcap Liquid 15NIFTY Midcap 150 Quality 50NIFTY50 Equal WeightNIFTY100 Equal WeightNIFTY100 Low Volatility 30NIFTY100 Alpha 30NIFTY Alpha 50NIFTY Dividend Opportunities 50NIFTY High Beta 50NIFTY Low Volatility 50NIFTY200 Quality 30NIFTY 500 Value 50NIFTY 100 Quality 30SECTORSAgricultureAirlinesAluminiumAsset Management CompaniesAutomobilesAuto AncillariesBanks (Private)Banks (PSU)BankingCementChemicalsDefenceDiagnosticsDronesEngineeringElectric VehicleElectric Vehicle BatteryEnergy SourcesESGEthanolFertilizersFintechFMCGFoodGreen HydrogenHotelsInfrastructureInsuranceInvestment and FinanceInvITIT (Large)IT (Others)LogisticsMediaMetalMiningIndia's Big Tech StocksIndian PharmaMNC PharmaPSUPaintPaperPlasticPowerRating AgenciesReal EstateREITsRenewable EnergyRetailingSemiconductorShippingSteelSugarSupply ChainTelecomTextilesTravel Support Services

10 results 25 results 50 results 100 results All results

Indian Share Market Update: Top Gainers and Losers