Sensex Rises 300 Points; Capital Goods & Healthcare Stocks Lead

Mon, 19 Aug 12:30 pm

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Share markets in India are presently trading on a positive note. Barring oil & gas sector, all sectoral indices are trading in green with stocks in the capital goods sector, healthcare sector and realty sector witnessing maximum buying interest.

The BSE Sensex is trading up by 306 points (up 0.8%), while the NSE Nifty is trading up by 82 points (up 0.8%). The BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 0.7%.

The rupee is trading at Rs 71.35 against the US$.

Speaking of stock markets in general, the market is typically focused on the most recent star performers.

You will often find the likes of HUL or HDFC Bank being the market darlings for never having a disappointing quarter.

But it is rare to find companies that thrive through most of their survival period.

Tanushree Banerjee shares few of her thoughts on this. Here's an excerpt of what she wrote in a recent edition of The 5 Minute WrapUp...

• It is rare to find companies that survive for decades. It's even rarer to find ones that thrive through most of their survival period.
  
  So, if you do not wish to pay steep valuations for the market darlings, you need to look for the companies with history and consistency on their side.
  
  And they shouldn't be too conspicuous to the market either.
  
  I am talking of companies like Hawkins and City Union Bank. They have a track record of paying dividends for decades.
  
  The dividends such companies pay are especially helpful at a time when globally interest rates are headed lower.

And, as seen in the chart below, 'risk-free returns' from debt seem to have gone missing.

Inflation Adjusted Risk Free Returns Are Negligible Globally

So, should you ignore the big bluechips while chasing dividend stocks?

As per Tanushree, big money is made over the long term, not by making more in the good years but by losing less in the bad years.

In news from the finance space, lenders to Dewan Housing Finance Corporation (DHFL) have agreed on a three-level resolution plan that includes conversion of debt to equity and issuance of nonconvertible debentures.

As per an article in The Economic Times, this step will give creditors majority stake in the embattled financier and help resume stalled credit lines.

Here's an excerpt from the article:

• The plan that lending banks have broadly agreed upon involves conversion of some debt into equity. This is a small portion, may be 1%. The majority part of the equity conversion will come from the haircut banks take on the wholesale loans of the company, at a nominal price of Rs 1 per share, which will give banks a majority share in the company.

Banks have a collective Rs 350 billion exposure to DHFL through loans, and the lenders also hold debentures. Bond holders, which include mutual funds, insurance companies and pension funds, also have a Rs 450 billion exposure.

State Bank of India (SBI), Bank of Baroda and Union Bank of India are the top lenders to the company.

DHFL is now classified as an SMA 2 (special mention account 2) exposure, meaning loans where the payment of interest is delayed for more than 60 days but less than 90 days. That means the account is still not classified as nonperforming.

Banks said the last payment DHFL made on its loans was on May 5, and that they are awaiting the next payment that fell due in July.

The restructuring plan being worked out by lenders also includes conversion of some loans into non-convertible debentures, instruments that will be long term in nature and give the company some breathing space on repayments.

Mutual funds that have exposure to the company have also written to the markets regulator, seeking permission to sign an inter-creditor agreement (ICA) with lenders to join the resolution process in keeping with the central bank's June restructuring guidelines.

The company said that they have till September to sign off on this plan and a decision will be made in the next few days.

DHFL share price is presently trading up by 11%.

Moving on to news from the IT sector, HCL Technologies has signed a Memorandum of Understanding (MoU) with Maharashtra Airport Development Company (MADC) for expansion of its MIHAN campus in Nagpur.

As part of the MoU, the company will acquire 90 acres of land to add to the existing state-of-the-art 50-acre campus in MIHAN.

Further, the company will conduct a mega recruitment drive in Nagpur on 24-25 August 2019 at its MIHAN campus.

The company also announced the launch of Tech Bee - HCL's early career program. Tech Bee is a work-integrated career program for students who have completed Class XII.

HCL Technologies share price is presently trading up by 0.9%.

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

And 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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