Sensex Climbs 150 Points; Yes Bank & ICICI Bank Top Gainers

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Share markets in India are presently trading on a positive note. Sectoral indices are trading mixed with stocks in the oil & gas sector and healthcare sector witnessing selling pressure, while banking stocks and finance stocks are witnessing buying interest.

The BSE Sensex is trading up by 153 points while the NSE Nifty is trading up by 43 points. The BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading down by 0.3%.

The rupee is trading at 70.97 against the US$.

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...

In news from the banking sector, Yes Bank is in talks with three top technology companies, including Microsoft, to induct one of them as a strategic shareholder as part of the bank's strategy to get fresh capital infusion.

Reports state that if the talks are productive, the private lender could sell as much as 15% through a fresh issuance. The stake sale may fetch the bank around Rs 20 billion.

A stake purchase of more than 5% in a bank requires the central bank's approval. Since talks between Yes Bank and Microsoft entail a potential stake sale of up to 15%, RBI approval will be mandatory.

In other news, Yes Bank is also in talks with three private equity (PE) players - TPG, The Carlyle Group and Farallon Capital for a stake sale.

As per an article in a leading financial daily, the talks have advanced substantially in the past few days and they could result in one or more private equity firms taking a significant stake in the bank, providing the growth capital the lender needs to compete at the top tier of Indian banking.

The private lender has been exploring different options for capital raising as much as US$ 1.2 billion. In a recent conference call, Chief Executive Ravneet Gill said Yes Bank's operating metrics and performance are 'absolutely sound' and the lender has enough liquidity.

Gill said the new investor will be either a strategic partner like a tech company, or a financial investor or a deep-pocketed family office.

He added that the bank has had "informal conversations on a no-names-basis" with RBI on the proposed infusion and he expects the central bank to take a "reasonable" decision.

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

Speaking of Yes Bank, Ankit Shah shares an interesting observation in the private sector bank's shareholding pattern over the last one year.

Here's what he wrote about it in today's edition of The 5 Minute WrapUp...

• What I found made me nervous and worried - individual investors have been the worst hit by the Yes Bank share price crash.
  
  The chart shows the number of shares held by individual shareholders holding nominal share capital up to Rs 1 lakh.

Yes Bank Crash: Who's Been the Worst Hit?

As you can see, the total shares held by individual shareholders holding nominal share capital up to Rs 1 lakh increased from 14.5 crore shares at the end of June 2018 to 43.4 crore at the end of June 2019. That's a drastic 200% jump in just one year.

Even the total number of individual shareholders that held Yes Bank shares increased by 195% from 3.76 lakh at the end of June 2018 to 11.08 lakh at the end of June 2019.

The key takeaway here for all individual investors is to not confuse the cheapness in share price for cheapness in valuations. Do not blindly buy shares of battered stocks expecting them to rebound to their earlier levels.

Moving on to news from the energy sector, shares of Bharat Petroleum Corporation (BPCL) fell 7% in early trade today after the government quietly cleared the way for privatization of the company.

Ahead of a proposed move to fully privatize the state-owned fuel retailer, the government had quietly repealed the legislation that had nationalized the company, doing away with the need to seek Parliament nod before selling it off to private and foreign firms.

The Repealing and Amending Act of 2016 had annulled "187 obsolete and redundant laws lying unnecessarily on the Statue-Book" including the Act of 1976 that had nationalized erstwhile Burmah Shell.

A senior official said that the act has been repealed and there is no need for a Parliament approval for strategic sale of BPCL.

The government is looking to sell 53.3% stake in BPCL to a strategic partner.

Reports state that privatization of BPCL will not just shake up the fuel retailing sector long dominated by state-owned firms but also help meet at least a third of the government's Rs 1.05 lakh crore disinvestment target.

BPCL share price is presently trading down by 4.3%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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Indian Share Market Update: Top Gainers and Losers