Sensex Ends 334 Points Lower; IT and Telecom Stocks Witness Huge Selling

Tue, 22 Oct Closing

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India share markets witnessed selling pressure during closing hours and ended their day deep in the red.

At the closing bell, the BSE Sensex stood lower by 334 points (down 0.9%) and the NSE Nifty closed down by 72 points (down 0.6%).

The BSE Mid Cap index ended the day down 0.1%, while the BSE Small Cap index ended the day up 0.5%.

Sectoral indices ended on a mixed note. Stocks in the IT sector and telecom sector witnessing most of the selling pressure, while healthcare stocks were trading in the green.

The rupee was trading at 70.96 against the US$.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 0.23% and the Shanghai Composite was up by 0.50%. The Nikkei 225 was up 0.25%.

European markets were also trading on a positive note. The FTSE 100 was up by 0.48%. The DAX was trading up by 0.21%, while the CAC 40 was up by 0.03%.

Speaking of the volatility witnessed in Indian share market lately, if you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

The Time to Buy Stocks is Now

Here's what Radhika Pandit wrote about this in a recent edition of The 5 Minute WrapUp...

• If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.
  
  Sarvajeet and I believe we are seeing a similar situation currently.
  
  The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

So, the real question is - Are you taking advantage of these price declines to buy quality stocks?

Also, amid the volatility witnessed in stock markets lately, 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 the banking sector, Yes Bank share price was in focus today. The stock of the lender witnessed buying interest amid reports that it is likely to take over Rs 60 billion of land held by Sumer Group in Radius joint venture (JV) over non-payment of Rs 4.79 billion loan.

As per a report by a leading financial daily, Yes Bank is to take control of real estate developer Sumer Group's 50% share in two land parcels, totalling 6.4 acres, held by its joint venture company in Mumbai's Santacruz locality.

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

The bank, among the newest in the industry, has been in trouble for over a year now, after the Reserve Bank of India (RBI) turned down the re-appointment of co-promoter Rana Kapoor as chief executive and managing director, on worries over corporate governance and risk management, among others.

The present management is led by chief executive Ravneet Gill who took charge in March after Kapoor was asked to leave by January 31 by the monetary authority in August 2018.

Earlier this month, the stock of Yes Bank was in focus after the lender denied reports suggesting active talks between the bank and Microsoft Corporation and two other tech firms for a possible stake acquisition.

The private lender clarified that it continues to explore various means of raising capital and funds through the issuance of securities to a diverse set of investors, in order to meet its business regulatory requirements.

Speaking of the banking sector, the recent Punjab and Maharashtra Co-operative bank fiasco has put small savers in the limelight yet again.

These banks have poor lending practices. Depositors have had to pay the price time and again.

In the short run, this has an adverse effect on microfinance lending as well. Micro finance institutions (MFIs) are skeptical about lending to even genuine borrowers in an uncertain environment.

But this is actually a blessing in disguise for MFIs with strong business practices.

After all, last mile connectivity in lending is still a huge opportunity.

Here's what Tanushree Banerjee wrote about this in a recent edition of The 5 Minute WrapUp...

• The average ticket size of a microfinance borrower in India is around Rs 38,000 which is much lower than the global average (Rs 65,000).
  
  The sector itself has grown at an average annual rate of 27% for the last 4 years.
  
  Still states like Uttar Pradesh, Bihar, and Madhya Pradesh with a large rural population are highly under-penetrated even today.

A private bank that is part of Tanushree's 7 stocks to buy list has already taken a step in this direction.

It will be a big beneficiary when the microfinance boom plays out in India.

Moving on to the news from the cement sector, Shree Cement share price was in focus today. The stock of the company witnessed buying interest today as the company's second quarter earnings beat analyst expectations.

On a year-on-year (YoY) basis, the cement maker reported an over six-fold jump in profit to Rs 3.09 billion, driven by healthy operating income and low base.

Revenue rose 5.2% YoY to Rs 30 billion in the quarter-ended September, with volume growth at 1% YoY.

At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 63% YoY. This was seen on the back of higher realisations and lower input cost.

Power sales volumes were under pressure during the quarter due to excess rainfall, with power sales plunging 20% YoY.

On the cement front, the company said it has been growing its capacity at 15% CAGR in the past few years and in the next four years, capacity will increase to 60 million tonne from 40 million tonne.

It also confirmed that a non-binding bid for Emami Cement in September has been submitted.

In related news, the board of the company has approved raising funds by way of issuance of shares for an amount not exceeding Rs 30 billion.

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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