Sensex Slips below 38,000-Mark; Yes Bank Jumps 9%

Mon, 22 Jul 12:30 pm

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Share markets in India are presently trading deep in the red as investors were disappointed after the government refused any respite to foreign investors registered as trusts from proposed super-rich tax.

Selling pressure was also seen after the Reserve Bank of India (RBI) governor said future interest-rate cuts would be depend on incoming data.

Sectoral indices are trading on a mixed note with stocks in the realty sector, finance sector and banking sector witnessing maximum selling pressure, while metal stocks and energy stocks are trading in green.

The BSE Sensex is trading down by 365 points (down 1%), while the NSE Nifty is trading down by 99 points (down 0.9%). The BSE Mid Cap index is trading down by 0.9% and the BSE Small Cap index is trading down by 1.3%.

The rupee is trading at Rs 69.02 against the US$.

The domestic currency opened on a cautious note and fell 26 paise in early trade today amid heavy selling in domestic equities and rising crude oil prices.

On Friday, the Indian rupee ended 17 paise higher at 68.80 against the US dollar as market participants pinned their hopes on an aggressive rate cut by the US Federal Reserve later this month.

Market participants are tracking TVS Motor share price, Wendt share price, and Lakshmi Machine share price as these companies are set to announce their June quarter (Q1FY20) results later today.

You can also read our recently released Q1FY20 results: Bandhan Bank, Cyient, Rallis, Dabur.

In news from the auto ancillaries sector, shares of Amara Raja Batteries jumped around 5% in early trade today after the company posted robust numbers for the quarter ended June 2019.

The company's standalone net profit jumped 24.7% to Rs 1,409 million versus Rs 1,130 million, while revenues rose 2% at Rs 18,149 million versus Rs 17,787 million.

Earnings before interest, tax, depreciation and amortization (EBITDA) jumped 26.6% at Rs 2,791 million, while margin was up 300 bps at 15.4%.

Reports state that company's performance was driven by 6% beat in net sales. The slowdown in original equipment (OE) sales, was more than compensated by the thriving replacement market. Overall sales volume rose by 7% year-on-year.

Inverter sales were flat and telecom sector continued its lackluster trajectory. However, strong market for uninterrupted power supply (UPS) driven by the industrial segment offset this.

Amara Raja Batteries share price is presently trading up by 1.2%.

To know more about the company, you can read Amara Raja's latest result analysis on our website.

Moving on, Cox & Kings share price is in focus today. Stock of the company fell as much as 5% to Rs 16.35, hitting lower circuit after Brickworks revised rating of NCDS.

Brickworks revised its rating of NCDs worth Rs 500 million to BWR D from BWR C. The stock of the travel company is presently trading at its record low. As of Friday's closing price, the stock has fallen 89% this year.

Last week, the company defaulted on commercial papers worth Rs 450 million and interest payment on NCDs. This was the fourth default by the company in last one month.

Lenders have turned cautious after Cox & Kings defaulted on commercial paper of Rs 2 billion in the last few days and are looking at ways to address the tour operator's debt issues.

The company has a total debt of Rs 32.4 billion at the end of FY19 which includes short and long-term loans.

The defaults have stumped lenders and stock market as the company had reported of a comfortable liquidity position.

CARE ratings also downgraded the tour operator's rating to 'default' grade, as it grappled with a cash crunch to service its debt and other obligations.

According to a recent note by CARE Ratings, Cox & Kings had reported cash and bank balances of Rs 17.3 billion in June. Of this, it told CARE, that there was about Rs 13 billion, which could be used for debt repayment at any point of time.

It is interesting to note that the stock of Cox & Kings has been a falling knife in the last few years. The stock is down more than 80% in the last 5 years.

Whereas, the stock that we recommended in Smart Money Secrets has been a consistent performer.

Just have a look at the chart below.

Divergence in Stock Performance

As Sarvajeet Bodas writes in a recent edition of The 5 Minute WrapUp...

• No wonder, Cox & Kings share price has lost 87% since 2018 and fallen 78% since the beginning of this year.
  
  Sure, the travel & tourism industry has a great runway for growth ahead.
  
  India is likely to become the third-largest tourism economy in the next 10 years. Not to mention, all the key triggers are in place for this industry to take off.
  
  Rising disposable incomes. A rapidly expanding the middle class. Urbanisation. Easy access to technology. The expansion of budget airlines.
  
  However, to ride this industry tailwinds, your side-car investing journey has to be in the company with a strong track record, ethical management and strong financials.

In Smart Money Secrets, we prefer companies which are run by excellent management, showing prudent capital allocation, businesses which have scalability, and a competitive advantage.

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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