DHFL Saga, Global Stock Market Drivers, and Top Stocks in Action Today

Tue, 1 Oct Pre-Open

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On Monday, Indian share markets witnessed negative trading activity throughout the day and ended lower.

The BSE Sensex closed down by 155 points to end the day at 38,667. Yes Bank and IndusInd Bank were among the top losers.

While the broader NSE Nifty ended down by 35 points to end at 11,477.

Among BSE sectoral indices, banking stocks fell the most, followed by finance stocks and healthcare stocks.

Top Stocks in Focus Today

Kajaria Ceramics share price will be in focus today as its wholly owned subsidiary - Kajaria Tiles has started the commercial production of tiles at its manufacturing facility situated in Andhra Pradesh.

Glenmark Pharma share price will also be in focus today as the company has received approval from the Ministry of Healthcare, Russia to market Montlezir (Levocetirizine Dihydrochloride 5mg + Montelukast Sodium 10mg) film-coated tablets.

The company has also received shareholders' approval to raise up to US$ 200 million through issuance of debt securities. The proposal was approved at the company's annual general meeting held on September 27, 2019.

To know more about the company, you can read Glenmark's latest result analysis and Glenmark's 2018-19 annual report analysis on our website.

Market participants will also track IDBI Bank share price. The lender has received in-principle approval to divest 6,23,23,800 equity shares (19.18%) of Asset Reconstruction Company (ARCIL).

DHFL's New Resolution Plan

In news from the finance sector, Dewan Housing Finance Corporation (DHFL) has submitted a draft resolution plan, proposing to convert debt to equity while seeking to sell assets and raise more capital.

The housing finance company, which held its annual general meeting on Saturday, put forth various proposals before its shareholders. The firm has sought approval for conversion of debt into equity, or new debt instruments, as part of the resolution plan.

Other proposals put forth were to increase the authorised share capital of the company from Rs 8.3 billion to Rs 10.9 billion.

According to the draft resolution plan, 2.3% exposure to various categories of lenders will be converted into equity. The remaining loans will be converted into new loans with 9, 10, and 21-year tenures.

As per an article in The Economic Times, lenders may convert part of DHFL's debt into 51% equity while non-bank entities such as mutual funds face losses of 40% or more.

Non-bank entities will only get a share of the liquidation value as they're not part of the creditors' consortium as per the plan.

Here's an excerpt from the article:

• The company, which announced the appointment of Vaijinath MG, a former Chief General Manager of State Bank of India as its CEO, has assumed a price of Rs 54 per share for debt conversion into equity by lenders to acquire 51% in the company.
  
  State Bank-led lenders are expected to complete a debt resolution plan quickly so that fresh funds start flowing in.

The company also said that in the past 12 months, it has repaid obligations of nearly Rs 450 billion, which is nearly 40% of its current balance sheet size.

Note that DHFL has been looking at various ways to emerge from the stress which first came to light in September last year following the collapse of Infrastructure Leasing and Financial Services.

How this pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space. Stay tuned.

From the IPO Space...

In latest developments from the IPO space, the initial public offering of the Indian Railway Catering and Tourism Corporation (IRCTC) was subscribed 69% as of 3 PM yesterday.

The offer received bids for 13.2 million equity shares against the offer size of 20.2 million shares, data available on the exchanges showed.

Shares set aside for retail investors were subscribed 1.89 times and employees were also fully subscribed now, while non-institutional investors' portion saw a subscription of 14%.

The proposed IRCTC IPO is expected to see the government sell stake worth Rs 4.8 billion through an offer for sale. The price band has been fixed at Rs 315-320 per share. Retail employees would be offered a discount of Rs 10.

Note that the company's plan to launch initial share sale comes immediately after a sharp turnaround in the Indian stock markets, following the finance minister's announcement last week to cut corporate taxes.

How this IPO sails through remains to be seen. We will keep you updated on all the news from this space.

Global Stock Market Drivers

European shares were flat on Monday as investors shrugged off fresh concerns about US-China trade negotiations and looming US tariffs on European imports.

A report on Friday said that the United States might limit Chinese company listings on its stock exchanges, fueling more US-China trade worries ahead of critical negotiations next week.

China's official Purchasing Managers' Index (PMI) rose to 49.8 in September, slightly better than expected and advancing from 49.5 in August.

On the commodities front, oil prices slipped as China's economic outlook remained weak even as manufacturing data improved, with an ongoing trade war with the United States weighing on demand growth for the world's largest crude importer.

Saudi Arabia has restored capacity to 11.3 million barrels per day after an attack on its processing facilities this month, although Saudi Aramco has yet to confirm it is fully back online.

Meanwhile, gold prices also fell as uncertainties around the trade war drove investors to the safety of the US$. Silver dropped over 1% to US$ 17.33 per ounce and platinum was down nearly 1% to US$ 929.77 per ounce.

As per the economic schedule released by Vijay Bhambwani, here are the important events which are due later today:

• India's Manufacturing PMI September
• Canada's GDP for July M-o-M
• USA's Manufacturing PMI September

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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