Sensex Ends 383 Points Lower; Banking and Finance Stocks Witness Selling

Thu, 29 Aug Closing

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Indian share markets witnessed negative trading activity throughout the day and ended deep in the red. Domestic investors remained cautious ahead of GDP data for the April-June quarter due on Friday.

Sectoral indices ended on a mixed note with stocks in the banking sector, finance sector and energy sector leading the losses, while metal stocks and healthcare stocks witnessed buying interest.

At the closing bell, the BSE Sensex stood lower by 383 points (down 1%) and the NSE Nifty closed down by 98 points (down 0.9%). The BSE Mid Cap index ended the day down 0.2%, while the BSE Small Cap index ended the day down by 0.6%.

The rupee was trading at 71.75 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.3% and the Shanghai Composite stood lower by 0.1%.

In news from the finance sector, Indiabulls Housing Finance share price witnessed selling pressure today.

Shares of the company fell around 8% in early trade today after it was announced that the company will be excluded from the benchmark index Nifty50, with effect from September 27.

The non-banking finance company (NBFC) will be replaced by the multinational fast-moving consumer goods company Nestle India. Shares of Nestle India hit a new high of Rs 12,890 in early trade today on back of the above news.

Note that earlier this month, Moody's Investors Service had downgraded the company's long-term corporate family rating to 'Ba2' from 'Ba1', due to pressure on the cost and availability of funds for the company and certain other finance companies in India.

The downgrade also factored the company's deterioration in asset quality, in the quarter ended June 2019, wherein stage 3 loans went up by 57% on a quarter-on-quarter basis.

So far this year, shares of Indiabulls Housing Finance have slipped over 60% from their 52-week highs.

Speaking of NBFCs, as per Tanushree Banerjee, the problem in the NBFC sector is far from over. But she believes the good quality NBFCs, and housing finance companies will continue to flourish and you can make the most of the opportunity by buying the safest NBFCs.

Moving on to news from the auto ancillaries sector, Amara Raja Batteries share price was in focus today. Stock of the company slipped around 5% after reports suggested global asset management company Brookfield was reconsidering its investment in the auto equipment company.

The AMC in a filing said, "Brookfield was actively evaluating its involvement with Amara Raja and was assessing how best it could position Clarios' participation in India".

As per TV reports, the company was "re-evaluating its investment plans in the Indian batteries market due to technological uncertainties".

Reports also state that the Canada-based AMC was looking to selling its stake in the battery manufacturer after the company terminated its shareholder agreement with Johnson Controls International Plc, its technology partner since 1997, earlier this year.

Brookfield got Amara Raja's stake in a global deal with Johnson Controls and it currently holds 24% stake in the battery maker.

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

Meanwhile, Maruti Suzuki has announced its new 'Service on Wheels' initiative. It is a smart workshop on the move to offer customers the option of availing Maruti Suzuki service at their doorsteps.

Service on Wheels is equipped with all modern tools and technologies to undertake service, repairs and other related jobs for all Maruti Suzuki passenger vehicles.

The offering is accessible for all engine variants including petrol, diesel and CNG in the Maruti Suzuki portfolio.

Maruti Suzuki share price ended the day up by 0.7%.

Speaking of the Indian auto industry, note that the sluggish market environment prevalent in the first quarter has continued in the beginning of the second quarter as well as its impact are visible in the despatch volumes.

The sector has been battling many negative forces - slowing economic activity, rising car prices (led by stricter emission norms and insurance costs), shortage of financing options because of the NBFC crisis, and weak rural sentiment. All these factors have dampened demand.

Have a look at the chart below:

April to July Auto Sales Are Down in the Dumps

It seems unlikely that the upcoming festival season will work wonders in terms of bolstering growth...unless the government steps in to help the industry.

In the below video, Tanushree Banerjee talks about what helped the auto stocks back in 2002, become 7, 15 and 24 baggers in a decade.

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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