DHFL Saga, Falling Passenger Vehicle Sales, and Top Cues in Focus Today

Mon, 14 Oct Pre-Open

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Indian share markets witnessed buying interest on Friday and ended their volatile trading session on a positive note.

On the sectoral front, gains were seen in the metal sector and FMCG sector.

At the closing bell on Friday, the BSE Sensex stood higher by 246 points (up 0.7%) and the NSE Nifty closed higher by 66 points (up 0.6%).

The BSE Mid Cap index ended up by 0.2%, while the BSE Small Cap index ended the day up by 0.4%.

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...

Top Stocks in Focus Today

From IT sector. TCS share price will be in focus today as the company reported its second quarter results last week.

TCS reported a 1.8% increase in its net profit to Rs 80.4 billion for the second quarter, a metric that may impact the company's target of achieving a double-digit growth this fiscal.

The rise in profit was below street expectations as the July-September quarter had historically been the strongest one for Indian IT services companies.

From the banking sector, Yes Bank share price will also be in focus today as the bank's single-largest shareholder and co-promoter, Shagun Gogia extended full support to the new management and said the issues of governance and transparency are fully dealt with now.

Gogia told that regulatory compliance, risk management and governance functions are fully streamlined at present at the bank and she is 100% confident that governance and transparency issues are also behind us.

Market participants will also be tracking Cipla share price today after Equirius said its Goa unit will require extensive changes to meet the USFDA guidelines.

According to Equirius, the unit received Form 483 with 12 observation that runs through 38 pages. The company stated that these observations are largely related to procedure and SOP lapses.

Passenger Vehicle Sales Fall in September

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.

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.

DHFL Shares at 11-Year low

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

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.

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