Sensex Ends 362 Points Lower; Realty and Banking Stocks Witness Selling

Tue, 1 Oct Closing

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Indian share markets witnessed a sharp decline in the afternoon session with benchmark indices falling over 2%. The BSE Sensex fell over 700 points intraday while the NSE Nifty fell below 11,250-mark.

Investor sentiments declined amid news that a number of companies, including real estate developers had deposits in the Punjab and Maharashtra Cooperative (PMC) Bank, which came under RBI scanner last week.

Selling pressure was also seen as automakers continued to post disappointing sales figures for August. India's largest carmaker Maruti Suzuki reported a 24.4% decline in sales at 1,22,640 units in September.

Barring oil & gas sector, all sectoral indices ended on a negative note with stocks in the telecom sector, realty sector and banking sector, leading the losses.

At the closing bell, the BSE Sensex stood lower by 362 points (down 0.9%) and the NSE Nifty closed down by 115 points (down 1%). The BSE Mid Cap index ended the day down 1.5%, while the BSE Small Cap index ended the day down by 1.6%.

The rupee was trading at 71.09 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.5% and the Shanghai Composite stood lower by 0.9%. The Nikkei was up 0.6%.

Speaking of share markets in general, Vijay Bhambwani, editor of Weekly Cash Alerts, gives quick insights on what to expect going forward.

When everyone was busy cheering the tax rate cuts by FM Nirmala Sitharaman, Vijay was the one to notice that just a few minutes later China cut its interest rates.

Tune in to find out his non-mainstream view...

Also, speaking of the volatility witnessed in Indian share market these days, if you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

The Time to Buy Stocks is Now

Here's what Radhika Pandit wrote about this in a recent edition of The 5 Minute WrapUp...

• If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.
  
  Sarvajeet and I believe we are seeing a similar situation currently.
  
  The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

So, the real question is - Are you taking advantage of these price declines to buy quality stocks?

In the news from the banking sector, Yes Bank share price was in focus today. The stock of the lender witnessed sharp selling today after promoters informed that they have sold another 2.16% stake in the bank.

Shares of the company crashed over 20% despite the bank saying on Monday that it has received acknowledgment from the Reserve Bank of India to go ahead with the proposed increase in its authorized share capital.

YES Capital (India), Morgan Credits Private and Rana Kapoor together sold 552 lakh shares, or 2.16%, stake in the open market during September 26-27.

With the fresh stake sale, Kapoor and his two family-owned entities, MCPL and Yes Capital (India), now own 4.72% stake in Yes Bank.

The bank has earlier stated that the stake sale process was purely to deleverage the debt of the entity.

In a filing to exchanges last week, Yes Bank said, "YES Capital (India) Private Ltd ("YCPL"), part of the promoter group of YES Bank, has sold 1.8% shareholding in the Bank."

It added that proceeds from the stake sale by Yes Capital will be utilized to prepay its entire balance outstanding NCDs of Yes Capital subscribed by various schemes of Franklin Templeton Asset Management (India) Pvt. Ltd.

In September 2017, Yes Capital had placed rated, zero coupon NCDs worth Rs 6.3 billion with Franklin Templeton. The NCDs were scheduled to mature in October 2020.

Earlier, another promoter entity Morgan Credits had sold 2.3% stake in the bank for Rs 3.4 billion, to prepay a certain part of its outstanding dues to Reliance Nippon Life AMC.

The above developments come at a time when concerns are being raised over the bank's exposure in the NBFC Altico Capital which has recently defaulted on interest payment.

Note that the stock of Yes Bank has been under pressure ever since the RBI curtailed its promoter-chief executive Kapoor's term on corporate governance concerns. Many of the bank's past lending bets under Kapoor are haunting the earnings now and keeping the share prices depressed.

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

In the news from the macroeconomic space, the manufacturing sector activity in September remained unchanged amid subdued demand conditions both domestically as well as externally.

The IHS Markit India Manufacturing PMI was at 51.4 in September, unchanged from August and thereby posting its joint-lowest reading since May 2018.

This is the 26th consecutive month that the manufacturing PMI has remained above the 50-point mark.

In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

The survey noted that business confidence sank to one of the lowest levels seen in over two-and-a-half years.

As per the study, some firms expect a pick-up in demand and investment in marketing to lift output in the year ahead, while others were concerned about competitive pressures and tough market conditions.

In September alone, forward-looking indicators such as business confidence and quantities of purchases were down, suggesting that companies are bracing themselves for difficult times ahead.

On the prices front, input cost inflation moderated to one of the lowest rates seen in over a decade. Subsequently, there was only a marginal rise in selling prices.

The central bank, which has already reduced the key policy rate four times in the current calendar year, is scheduled to announce its next bi-monthly monetary policy on October 4.

India's economic growth has slumped for the fifth straight quarter to an over six-year low of 5% in the three months ended June as consumer demand and private investment slowed amid deteriorating global environment.

How this activity pans out in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments form this space.

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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