Indian Indices Trade on a Volatile Note; IT and Metal Stocks Witness Buying

Fri, 11 Oct 12:30 pm

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Share markets in India are presently trading marginally higher.

Sectoral indices are trading mixed with stocks in the metal sector and IT sector witnessing buying interest, while energy stocks and banking stocks are witnessing selling pressure.

The BSE Sensex is trading up by 66 points while the NSE Nifty is trading up by 21 points.

The BSE Mid Cap index is trading flat, while the BSE Small Cap index is trading up by 0.1%.

The rupee is trading at 71.00 against the US$.

Speaking of Indian stocks markets, the stock market has not been kind to investors of late.

There has been a sudden shift in market sentiment on the back of same major developments.

And investors across the rank and file - from institutional to retail - have been at the receiving end. The mayhem has spared no one.

Amid all these, Tanushree Banerjee, in the video below, talks about the Rebirth of India phenomenon and how 3 specific trends are racing ahead even in these gloomy times.

Tune in to find out more...

In the news from finance sector, Dewan Housing Finance Corporation (DHFL) is in focus today. The stock of the company hit nearly 11-year low and is locked in the lower circuit for the third successive session today.

Selling pressure was seen as the Bombay High Court restrained the firm from making further payments or disbursements to any unsecured creditors until further orders.

Edelweiss Financial Services yesterday said its subsidiary had approached the Bombay High Court to recover dues from debt-laden DHFL.

Earlier, on September 4, the court had restrained DHFL from paying dues to any lender until October 10. Yesterday, Justice AK Menon, in his oral order, while granting a plea of Reliance Nippon AMC to restrain DHFL from disposing of an asset, also allowed Edelweiss AMC's prayer to disclose all the assets and liabilities of the non-bank lender.

Edelweiss Asset Management has also approached the Bombay High Court to recover its dues of around Rs 700 million. DHFL owes around Rs 4.7 billion to Reliance Nippon AMC. Reliance Nippon Life Asset Management approached the courts against the stressed home financier. Edelweiss AMC, in its petition, sought the appointment of a court receiver and disclosure of all assets of DHFL.

Prateek Mishra of law firm L&L Partners is representing Reliance AMC and Munaf Virjee, managing partner of ABH Law, is representing DHFL and Kapil Wadhawan in the case.

Edelweiss AMC is being represented by Vikram Trivedi, managing partner of Manilal Kher Ambalal & Co.

The court has given four weeks to DHFL to file its response to the petition filed by Edelweiss AMC. Bondholders have Rs 410 billion exposure to DHFL, and banks have Rs 275 billion.

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

Moving on to the news from the automobile sector, domestic passenger vehicle sales dropped by 23.69% in September to 2,23,317 units. This was down from 2,92,660 units in the year-ago period and meant the 11th consecutive month of decline in vehicle off-take.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales were down 33.4% to 1,31,281 units last month as against 1,97,124 units in September 2018.

Motorcycle sales last month declined 23.29% to 10,43,624 units as against 13,60,415 units a year earlier.

Total two-wheeler sales in September declined 22.09% to 16,56,774 units compared to 21,26,445 units in the year-ago month.

Sales of commercial vehicles were down 39.06% to 58,419 units in September as compared with 95,870 units in the same period of last year.

Vehicle sales across categories registered a decline of 22.41% to 20,04,932 units from 25,84,062 units in September 2018.

Speaking of the auto sector, multiple factors have affected the auto sector of late. The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms...they have all taken their toll.

The industry's sales and production levels have plunged, leading to job losses. In August, all major OEMs consisting of passenger, commercial, two and three-wheeler manufacturers have reported a massive decline in domestic sales.

As per Society of Indian Automobile Manufacturers' (SIAM) August sales figures, the overall sectoral offtake in the domestic market has plunged 23.6% to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year.

On 20 September, the government had reduced corporate tax rates from 30% to 22% to boost consumer demand and increase spending by private companies. The effective tax to be paid by the companies, including surcharge and cess, will be 25.17%.

However, in the euphoria of the government's tax rate cuts, an important announcement went unnoticed.

The road transport and highways ministry has proposed a huge increase in re-registration of vehicles which are more than 15 years old.

The proposed hike will be implemented from July 2020. The policy change is aimed at reducing pollution by scrapping older vehicles on the road.

As per Co-head of Research, Tanushree Banerjee, this might come as a welcome relief for automakers who have seen severe fall in sales over the past 1 year.

Signs of Revival in the Auto Sector

Here's what she wrote about it in one of the editions of The 5 Minute WrapUp...

• The upcoming festive season and the recent policy measures might just be the trigger needed to revive the sector.
  
  A leading auto player makes it to my list of 7 stocks to buy.
  
  I believe, rising disposable incomes and aspirations of India's youth, will be the key trends benefiting this market leader in the long run.

As per Tanushree, these are just some of the trends that will play a big part in the Sensex 1,00,000 journey.

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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