Sensex Ends 93 Points Higher; Oil & Gas and Realty Stocks Witness Buying

Wed, 16 Oct Closing

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Indian share markets traded on a volatile note throughout the day and ended marginally higher.

Sectoral indices ended on a mixed note with stocks in the oil & gas sector and realty sector witnessing buying interest, while power stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 93 points and the NSE Nifty closed up by 43 points. The BSE Mid Cap index ended the day down by 0.1%, while the BSE Small Cap index ended up by 0.2%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up 0.6% and the Shanghai Composite stood lower by 0.4%. The Nikkei 225 was up 1.2%.

The rupee is trading at 71.37 against the US$.

In news from the banking sector, private sector lender Federal Bank reported 56.7% growth in its net profit, driven by other income and lower tax cost. Profit rose to Rs 4,167 million against Rs 2,660 million in same period last year.

Net interest income grew by 9.9% year-on-year (YoY) to Rs 11,238 million. Loan growth came at 14.8%.

The bank's asset quality weakened during the quarter under review with gross non-performing assets (NPA), as a percentage of gross advances, rising 8 bps to 3.07% and net NPA increasing 10 bps to 1.6% quarter-on-quarter.

Fresh slippages increased to Rs 5.4 billion at the end of Q2FY20 against Rs 4.2 billion at the end of Q1FY20.

Provisions increased sharply to Rs 2.5 billion versus Rs 1.9 billion in Q1FY20 but fell from Rs 2.9 billion in Q2FY19.

On a consolidated basis, net profit came in at Rs 4,253.4 million, up 51.6%. The bank had reported a net profit of Rs 2,806.1 million in the corresponding quarter last year.

Federal Bank share price ended the day down by 2.6%.

Speaking of the banking sector, note that 2019 has been brutal for some banking stocks.

The market has severely punished them. This is due to issues such as worsening asset-quality, corporate governance, and inadequate capital.

Have a look at the chart below to see the worst performers of 2019 in the banking sector:

Falling Knives in the Banking Sector

Here's what Sarvajeet Bodas, editor of Smart Money Secrets wrote about it in today's edition of The 5 Minute WrapUp...

• Stocks such as Yes Bank and Lakshmi Vilas Bank are down more than 70%.
  
  Surprisingly, RBL Bank is the latest victim added to the worst performers list of 2019. You see, RBL Bank is down 64% from its recent high in May 2019.
  
  What's the issue here?
  
  Well, the management expects to face challenges in recovering some loans in the near term.
  
  They have guided for elevated stress in a few corporate accounts, rising non-performing assets, and higher provisioning. This could impact the earnings of the bank.
  
  Does this situation seem familiar to you?
  
  Falling stock prices could be enticing. After all, we love deep discounts and good bargains.

As per Sarvajeet, the key takeaway here is, if a stock is in a falling spree, there's probably a good reason behind it. Do not blindly buy shares of battered stocks expecting them to rebound to their earlier levels.

Moving on to news from the consumer durables sector, shares of Bajaj Consumer Care were locked in 20% upper circuit today after Mutual Funds-led institutional investors bought more than 20% stake from the promoters of the company.

HDFC Mutual Fund bought 5.3% stake, followed by ICICI Prudential Mutual Fund at 2.5% and Aditya Birla Sun Life Mutual Fund at 1.8%.

Natwest Bank PLC, as trustee of Jupiter India Fund, Steinberg India Emerging Opportunities Fund and ICG Q from the foreign portfolio investors purchased between 1-2% stake in the company from open market.

On Tuesday, promoters of the company sold nearly 22% of their stake in the company for Rs 6.3 billion to pay-off debt and remove the pledge on stake from the banks.

Shares of the company had plunged 15% on back of the above news.

Data available on the exchange showed that Bajaj Resources sold 32.3 million equity shares, representing 21.9% stake at price of Rs 194.56 per share.

Earlier in March, Bajaj Resources had offloaded 10.1 million shares, representing 6.9% stake, in Bajaj Consumer Care for Rs 3.2 billion.

Last week, the company had reported 11.2% growth in its net profit at Rs 560.3 million.

On a standalone basis, net profit rose 10.9% to Rs 572.9 million on a 2.6% increase in net sales to Rs 2,111.9 million.

With the change in corporate tax rates, the company's effective tax rate reduced to 17.5% from 21.5%, resulting into increase in PAT by Rs 57.3 million.

To know more, you can read the company's latest result analysis on our website.

And 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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