Sensex Ends above 39,000-Mark; Automobile and Banking Stocks Witness Buying

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Extending gains to the fifth day, Indian share markets rose sharply during the afternoon session and ended on a strong note.

All sectoral indices ended on a positive note with stocks in the automobile sector, banking sector and finance sector witnessing maximum buying interest.

At the closing bell, the BSE Sensex stood higher by 453 points (up 1.2%) and the NSE Nifty closed higher by 122 points (up 1.1%). The BSE Mid Cap index ended the day up by 1.8%, while the BSE Small Cap index ended up by 0.9%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng was up 0.6% and the Nikkei was down by 0.1%.

The rupee was trading at 71.25 to the US$ at the time of writing.

Speaking of Indian stock 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...

Market participants were tracking Force Motors share price, Mastek share price, and PVR share price as these companies announced their September quarter (Q2FY20) results today.

You can also read our recently released Q2FY20 results of other companies here: Infosys, TCS, IndusInd Bank, Bajaj Consumer Care, Wipro, ACC, HUL.

In the news from IT sector, Mindtree share price was in focus today as the company posted a profit of Rs 1.4 billion for the quarter ended September. This was down 35% from the year ago quarter, hurt by higher expenses on account of salary increases and headcount.

Revenue for the quarter stood at Rs 19.1 billion.

The company posted a margin of 13% in the second quarter, up from 10% in the first quarter.

On a press call, the company said it expects continued margin improvement in the second half of the financial year as the company which was recently acquired by Larsen & Toubro focuses solely on profitable growth, going forward.

Also, speaking of quarterly results and corporate profits, economic growth (GDP) and corporate profit growth hardly go hand in hand.

Over the past few years, the share of corporate profits to GDP has steadily declined.

This is evident in the chart below:

Rebound in Corporate Profits May Not Immediately Reflect in GDP

As per Tanushree Banerjee, the revival of capex cycle may cause corporate profits to soar much faster than the GDP growth. Investors who stay focused on macro numbers may miss this bus.

Moving on to the news from the finance sector, DHFL share price was also in focus today as the company has emerged as the lender that gave loans worth Rs 21.9 billion to Sunblink Real Estate, the firm at the centre of investigations into the financial operations of late Dubai-based gangster Iqbal Memon.

As per the news, investigations by the Enforcement Directorate (ED) have revealed that a non-banking financial company had started giving loans to Sunblink from 2010. The ED believes this money - Rs 21.86 billion - was allegedly routed overseas by Sunblink into the accounts of Iqbal Memon.

The ED has not named DHFL as the NBFC in question, but Sunblink's accounts for 2010 clearly indicate that it had received Rs 220 million as loans from the troubled Mumbai-based financial services firm during the year.

The documents reviewed show financial ties between Sunblink and DHFL.

In July this year, DHFL had approved consolidation of loans to Sunblink, along with security perfection amounting to Rs 21.9 billion.

Last week, the stock of the company hit nearly 11-year low 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.

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 developments from this space.

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

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