Sensex Opens Higher; Tech Mahindra, Asian Paints & IndusInd Bank Among Top Gainers

Mon, 9 Aug 09:30 am

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Asian share markets are trading on a mixed note today amid concerns of rising Covid cases.

Meanwhile, holidays in Tokyo and Singapore made for thin trading conditions.

The Hang Seng and the Shanghai Composite are trading up by 0.9% and 1%, respectively.

In US stock markets, Wall Street indices ended at an all-time high on Friday after the monthly US jobs report came in better than expected, as the economy continues to recover from the Covid-19 pandemic and investors shake off delta variant concerns.

The Dow Jones Industrial Average rose 272 points, or 0.8%. Meanwhile, the Nasdaq Composite advanced 115 points, or 0.8%.

For the week, the Dow gained 0.8%, while the tech-heavy Nasdaq rose 1.1%.

Back home, Indian share markets have opened on a positive note.

Market participants will track shares of Shree Cement, AstraZeneca Pharma India, Clean Science and Tech, Indian Hotels, and MRF as these companies are slated to post their earnings today.

Meanwhile, shares of Rolex Rings are going to list today on the bourses.

The BSE Sensex is trading up by 182 points. Meanwhile, the NSE Nifty is trading higher by 55 points.

Tech Mahindra and M&M are among the top gainers today. Reliance, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index have opened higher by 0.1% and 0.3%, respectively.

Sectoral indices are trading mixed with stocks in the IT sector and FMCG sector witnessing buying interest.

Power stocks, on the other hand, are trading in red.

Shares of Tata Investment and Tejas Networks hit their 52-week highs today.

The rupee is trading at 74.34 against the US$.

Gold prices are trading down by 2% at Rs 46,660 per 10 grams.

Meanwhile, silver prices are trading down by 3% at Rs 64,980 per kg.

Gold skidded to a more than four-month low today as robust US jobs data stoked fears that the Federal Reserve would raises rates quicker than expected, increasing the opportunity cost of holding non-interest bearing bullion.

Speaking of stock markets, in his latest video, Co-head of Research at Equitymaster Rahul Shah discusses how you can find multibagger stocks by taking minimum risk.

Tune in to the below video to find out more:

In news from the telecom sector, Vodafone Idea (Vi) is among the top buzzing stocks today.

Lenders of Vodafone Idea, led by State Bank of India (SBI), have said converting the debt of cash-strapped Vi to equity is one option to get out of the precarious position banks are in.

Banks are concerned over their exposure to the telecom operator. SBI has an exposure of about Rs 111 bn in the telco.

At a meeting with the telecom department on Friday to discuss the stress in the sector, the lenders, however, said that since Vodafone Idea had not defaulted on its debts so far, they cannot take any action yet.

They instead pushed the Department of Telecommunications (DoT) to take steps to save the carrier, failing which the government would stand to lose a lot more than banks.

The banks, which also have a high exposure to bankrupt Reliance Communications, urged DoT not to cancel its telecom licence, saying such a move would kill its entire resolution process under the Insolvency and Bankruptcy Code (IBC).

The Aditya Birla group holds 27.66% in Vodafone Idea, while co-parent Vodafone Group owns 44.39%.

As of March end, Vodafone Idea owed Rs 1.57 lakh crore to the government, including Rs 962.7 bn towards spectrum payments and the rest towards its adjusted gross revenue (AGR) liability.

In comparison, banks have a total exposure of a little over Rs 350 bn.

Vodafone Idea has said its operations are not generating adequate cash and had sought a year more till fiscal 2023 to pay the over Rs 82 bn for spectrum that is falling due in April next year.

Vodafone Idea share price has opened the day up by 5%.

Moving on to news from the banking sector, Bank of Baroda on Saturday posted a standalone net profit of Rs 12.1 bn as it swung back to profit for the quarter ended June 2021.

The lender had posted a net loss of Rs 8.6 bn in the year-ago period.

The lender's net interest income (NII) - the difference between interest earned and interest expended, rose 16% to Rs 78.9 bn as against Rs 68.2 bn in the year-ago period.

The lender's asset quality improved marginally in the June quarter as gross non-performing assets (GNPA) came at 8.86% as against 8.87% quarter-on-quarter (QoQ).

The quarterly net NPA stands at 3.03% as against 3.09% in March 2021.

Total provisions and contingencies for the quarter eased to Rs 41.1 bn from Rs 56.3 bn a year ago.

As per the Reserve Bank of India (RBI) circular, the bank has opted to provide the liability for frauds over a period of four quarters.

Accordingly, the carry forward provision as on June 2021 is Rs 3.5 bn which is to be amortised in the subsequent quarters by the bank.

Bank of Baroda share price has opened the day up by 1.2%.

Speaking of public sector undertakings (PSU), have a look at the chart below which shows the performance of BSE PSU index compared to BSE Sensex over the past few years.

As can be seen from the chart above, over the last decade, Rs 100 invested in BSE-PSU index would have eroded to Rs 80, compared to almost 3x gains for the Sensex.

Here's what Richa Agarwal, lead Smallcap Analyst at Equitymaster, wrote about PSU stocks in a recent edition of Profit Hunter:

• However, it will be folly to paint all PSUs with the same brush. There are some exceptions in this space, which put their private peers to shame.
  
  In a recent editorial, I shared an opportunity in a PSU stock that is riding and enabling an irreversible megatrend - digitisation.

One of Richa's stock recommendation (subscription required) is a stock from this space. This smallcap PSU is leading the digitisation drive from the frontlines.

Richa believes it could be a perfect bet for these uncertain times. Hidden Treasure subscribers can read the recommendation here.

And if you're not a subscriber, here's where you can sign up.

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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