Of the Ongoing Correction in Smallcap Stocks, Falling Forex Reserves, and Top Cues in Focus Today

Tue, 6 Aug Pre-Open

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India share markets continued to witness selling pressure during closing hours yesterday and ended their day deep in the red.

At the closing bell yesterday, the BSE Sensex stood lower by 418 points (down 1.1%) and the NSE Nifty closed down by 134 points (down 1.2%).

The BSE Mid Cap index ended down by 1.3%, while the BSE Small Cap index ended down by 1.7%.

Note that the decline in small-cap segment has been sharper since the Union Budget, with the BSE Smallcap index hitting its lowest level since February 2017.

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

In the below video, she talks about picking right stocks to benefit from the upcoming rebound.

You can know more about small caps here: One Stock Crorepati, Best Stock to Buy, Falling Smallcap Stocks, Smallcap Stocks Under Modi 2.0, and Crorepati stocks.

Top Stocks in Focus Today

From the FMCG sector, Bata India share price will be in focus today as the company announced it is planning to add around 100 stores in the 2019-20 fiscal, while downing shutters of 25-30 non-viable outlets.

The company is also looking to open 500 franchised stores over a period of five years. The company had opened 71 new retail and 51 franchised stores and renovated 47 outlets across India in 2018-19.

From the finance sector, DHFL share price was in focus today as Deloitte quit as the auditor of cash-strapped company.

Market participants will be tracking Nesco share price, Dilip Buildcon share price, KEI Industries share price, and Torrent Power share price as these companies announced their June quarter (Q1FY20) results yesterday.

You can read our recently released Q1FY20 results of some other companies here: Ceat, Apollo Tyres, ITC, Nestle.

India's Forex Reserves on a Decline

Moving on to the news from the macroeconomic space... India's foreign exchange reserves decreased by US$727.1 million during the week ended July 26.

According to the Reserve Bank of India's weekly statistical supplement, the overall forex reserves declined to US$429.6 billion from US$430.4 billion reported for the week ended July 12.

India's forex reserves comprise Foreign Currency Assets (FCAs), gold reserves, Special Drawing Rights (SDRs) and India's reserve position with the International Monetary Fund (IMF).

On a weekly basis, FCAs - the largest component of the forex reserves - edged lower by US$1.7 billion to US$399.4 billion.

Besides the US dollar, FCAs consist of 20-30% of the other major global currencies.

The SDR value slipped by US$2.8 million to US$1.4 billion, whereas the country's reserve position with the IMF declined by US$15.8 million to US$3.5 billion.

However, the RBI's weekly data showed that the value of the country's gold reserves went up by US$1 billion to US$25.3 billion.

Blackstone to Acquire Remaining 50% Stake in Indiabulls Real Estate's Commercial Properties

In news from the realty sector, US-based private equity giant Blackstone Group is set to acquire the remaining 50% stake in Indiabulls Real Estate's commercial properties for around Rs 48 billion.

This will give Blackstone full control of the portfolio and further strengthen its position as the country's largest commercial property owner.

Earlier in March 2018, Blackstone had concluded a similar deal for a 50% stake in this portfolio for nearly Rs 47.5 billion. Indiabulls is planning to utilize the proceeds from this deal to repay its debt and bring it down to zero.

As per an article in The Economic Times, the transaction is part of the Indiabulls Group's strategy of exiting real estate completely and focusing on financial services as it seeks to merge with Lakshmi Vilas Bank.

Here's an excerpt from the article...

• The transaction is expected to be concluded over the next few weeks. Both the parties have agreed in principle to conclude the deal. Indiabulls is expected to present the transaction to its board soon.
  
  The private equity firm is expected to add the assets to the portfolio of Embassy Office Parks Real Estate Investment Trust (REIT), its joint venture with Bengaluru-based realty developer Embassy Group.

Embassy Office Parks listed India's maiden REIT in April. It has 33 million square feet of office and hospitality assets, comprising seven business parks and four city-centric buildings in Mumbai, Bengaluru, Pune and Noida. The REIT raised Rs 47.5 billion through the issue that was subscribed 2.58 times.

In June, Embassy Group entered into an agreement to acquire Indiabulls' promoter Sameer Gehlaut's entire 39.5% stake in listed company Indiabulls Real Estate for Rs 27 billion.

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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