Sensex Opens Over 150 Points Lower; Axis Bank, Tech Mahindra Slip 4%

Wed, 31 Jul 09:30 am

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Asian share markets are lower today as Chinese and Hong Kong shares fall. The Nikkei 225 is down 0.7% while the Hang Seng is down 0.9%. The Shanghai Composite is trading down by 0.5%.

Wall Street indices ended lower on Tuesday after a warning from President Donald Trump to China amid ongoing trade negotiations pressured technology shares.

Back home, India share markets have opened the day on a negative note. The BSE Sensex is trading down by 175 points while the NSE Nifty is trading down by 59 points. The BSE Mid Cap index and BSE Small Cap index both opened the day down by 0.8%.

All sectoral indices have opened the day on a negative note with metal stocks and IT stocks witnessing maximum selling pressure.

The rupee is trading at Rs 68.90 against the US$.

Market participants are tracking CARE ratings share price, IOC share price, and Trent share price as these companies are set to announce their June quarter results later today.

You can read our recently released Q1FY20 results: Force Motors, Maruti Suzuki, Vedanta, Tata Motors, Supreme Industries.

In news from the banking sector, the Reserve Bank of India (RBI) on Tuesday allowed domestic banks to directly sell their bad loans in manufacturing and infrastructure sectors to investors abroad as part of one-time settlement (OTS) exercises.

In a statement, RBI said that the defaulters, or stressed borrowers, can sell their assets in accordance with the OTS scheme, in order to raise external commercial borrowing (ECB) from abroad to repay domestic loans.

The RBI notification said corporate borrowers can avail of ECB "for repayment of rupee loans availed domestically for capital expenditure in manufacturing and infrastructure sector and classified as SMA-2 or NPA, under any one-time settlement arrangement with lenders".

As per reports, the above move will open two possibilities. One, instead of heading for the Insolvency and Bankruptcy Code (IBC), banks and the companies can now easily get into an OTS scheme between themselves, funds for which must be raised abroad by the defaulter, or the banks.

Bankers pointed out that RBI was distinctly uncomfortable with this route and didn't allow companies to raise money abroad to repay domestic loans for the precedence of the money abroad is not known.

In other news, private lender Axis Bank reported 95% year-on-year (YoY) rise in net profit for June quarter aided by good performance in its key operating parameters although slippages and provisioning remained on the higher side.

The net profit for the quarter was at Rs 13.7 billion, compared to Rs 7 billion in the year-ago quarter. However, analysts were expecting the bank to post profit of Rs 18.6 billion.

Bank's net interest income rose 13% to Rs 58.4 billion in Q1FY20, compared to Rs 51.7 billion in the same period of FY19.

Non-interest income of the lender saw a 32% rise at Rs 38.7 billion in Q1, compared to Rs 29.3 billion in the same period last year. Net interest margin (NIM) stood at 3.40% for the quarter, against 3.46% in the year-ago period.

Asset quality remained stable, with gross non-performing assets (NPA) ratio staying at 5.25% in Q1FY20, against 5.26% in the March quarter.

Axis Bank share price has opened the day down by 5%.

Moving on, in latest developments from the IPO space, the initial public offer (IPO) of mobile marketing firm Affle India was subscribed 81% on the second day of the bidding process.

The IPO, which looks to raise Rs 4.6 billion, received bids for 27,43,040 shares against the total issue size of 33,78,021 shares as per the NSE data.

The category reserved for qualified institutional buyers (QIBs) was subscribed 37%, non-institutional investors 10% and retail individual investors was filled in 3.21 times.

Founded in 2005, Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer engagements, acquisitions and transactions through relevant mobile advertising.

Ankit Shah, in his premium newsletter Insider, has shared the detailed note of the IPO. You can read it here.

Speaking of IPOs, the first half of 2019 hasn't seen a lot of activity in the IPO market.

There have been just 8 IPO on the main board, raising as much as Rs 55.1 billion, compared with 24 that raised Rs 309.6 billion in the year earlier period.

Despite lackluster activity in India's primary markets, there have been attractive money-making opportunities for attentive investors.

Ankit Shah recommended applying to the IPO of Polycab India and the more recent IPO of IndiaMART InterMESH.

Both IPOs were subscribed many times over. And both gave handsome double-digit returns on the listing date.

Top 3 IPO Gains in 2019

At Equitymaster, we believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

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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