Indian Indices Trade Rangebound; HDFC & Tata Steel Top Losers

Tue, 23 Jul 12:30 pm

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Share markets in India are presently trading on a positive note. Sectoral indices are trading on a mixed note with stocks in the realty sector, power sector and FMCG sector witnessing buying interest, while metal stocks and automobile stocks are trading in red.

The BSE Sensex is trading up by 46 points while the NSE Nifty is trading up by 12 points. The BSE Mid Cap index is trading down by 0.2%, while the BSE Small Cap index is trading up by 0.4%.

Speaking of Indian share markets, note that continuous selling by foreign investors post the Union Budget and corporate results for June 2019 quarter that failed to enthuse investors have dented the overall market sentiment.

The decline in small-cap segment has been sharper since then, with the BSE Smallcap index hitting its lowest level since February 2017 on Monday.

But Richa Agarwal says this fall currently offers the best bargains to the market.

In the below video, she talks about how market correction post budget offers great buying opportunities in Smallcap space.

To know more about smallcaps, read One Stock Crorepati, Best Stock to Buy, Falling Smallcap Stocks Smallcap Stocks Under Modi 2.0, Crorepati stocks

Moving on, market participants are tracking CRISIL share price, Larsen & Toubro (L&T) share price, and HUL share price as these companies are set to announce their Q1FY20 results later today.

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

In news from the finance sector, Dewan Housing Finance Corporation (DHFL) has received investor proposals for buying stake in the company. The company expects to obtain lenders' approval on the final resolution plan by end this month.

In a board meeting on July 22, it was taken on record that the company received non-binding indicative term sheets as a part of the corporate restructuring plan.

In a statement to exchanges after the meeting, DHFL said, "any proposals approved will constitute a part of the resolution plan. There have been discussions for stake sale by the promoters to a strategic partner with further equity infusion".

DHFL also said that the company planned to monetize its assets and was in talks with domestic banks, as well as international financial institutions, to sell off its retail and wholesale portfolio.

The debt-laden company also filed its long-delayed audited results for the quarter ended March 31 and revealed that its auditors had raised several red flags around its numbers, raising fresh concerns about the future of the troubled lender.

In response, DHFL has said the allegations are unfounded and malicious. An independent auditor appointed by DHFL's board to probe the allegations gave the company a clean bill but noted that the firm's monitoring of loans was inadequate.

It had total debt of US$ 14.6 billion at the end of March, including about Rs 400 billion owed to banks. State Bank of India and subsidiaries have an exposure of Rs 190 billion to the company.

DHFL share price is presently trading up by 12.5%.

Moving on to news from the banking sector, private lender Kotak Mahindra Bank on Monday reported 32.7% year-on-year (YoY) rise in standalone profit at Rs 13.6 billion for the quarter ended June 30.

Provisions and contingencies declined 32.6% YoY to Rs 3.2 billion during the quarter under review. However, the figures jumped 85% on a quarterly basis.

Net Interest Income (NII) for Q1FY20 increased 23% to Rs 31.7 billion from Rs 25.8 billion in Q1FY19. Net interest margins (NIM) rose to 4.5% up from 4.3% on a yearly basis.

Consolidated profit for the June quarter increased 23% to Rs 19.3 billion from Rs 15.7 billion in Q1FY19.

To know more about the company, you can read Kotak Mahindra Bank's latest result analysis on our website.

In other news, HDFC Bank has signed a memorandum of understanding (MoU) with CSC eGovernance Services India and Confederation of All India Traders (CAIT) to offer a full range of banking products and services to all CAIT members.

Reportedly, the lender will offer services including opening of a current account, and issuance of Bharat QR code to promote digitalization and reduce cash transactions in line with the objectives of Digital India.

The bank will also offer Small Business Moneyback Credit Card to provide easy access to small business finance to CAIT members.

Note that shares of the private lender witnessed huge selling pressure yesterday on the back of moderate weakness in Q1FY20 asset quality numbers and slowdown in retail loan growth.

The private sector lender registered a 21% year-on-year (YoY) increase in profits and 23% YoY rise in net interest income with loan growth at 17% for the quarter ended June 2019.

You can read HDFC Bank's latest result analysis here.

Speaking of the banking sector, it was recently reported 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 one of the recent editions 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.

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