Sensex Ends Flat; Banking and IT Stocks Witness Buying

Fri, 25 Oct Closing

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Indian share markets witnessed volatile trading activity throughout the day and ended on a flat note.

Sectoral indices ended on a mixed note with stocks in the banking sector and IT sector witnessing buying interest, while telecom stocks and consumer durable stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 38 points and the NSE Nifty closed up by 1 point. The BSE Mid Cap index ended the day up by 0.1%, while the BSE Small Cap index ended down by 0.4%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Shanghai Composite was up 0.5% and the Nikkei 225 was up 0.2%.

The rupee is trading at 70.90 against the US$.

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 news from the banking sector, shares of ICICI Bank crossed the Rs 3 trillion market capitalisation for the first time today, making it the country's fourth lender to achieve this milestone. Intraday, the stock touched a fresh record high of Rs 466 on the BSE.

Earlier, HDFC Bank, State Bank of India and Kotak Mahindra Bank had achieved this landmark.

Meanwhile, State Bank of India (SBI) reported a standalone net profit of Rs 30.1 billion for the September quarter (Q2FY20), up 218% YoY. The public sector bank had logged a profit of Rs 9.5 billion in Q2FY19.

Shares of SBI jumped nearly 7%, reacting to earnings numbers.

The bank's consolidated profit came at Rs 34.8 billion on sale of partial investments in subsidiary SBI Life Insurance Company.

The bank reported a net interest income (NII) of Rs 246 billion, up 17.7% YoY from Rs 209.1 billion logged in Q2FY19.

SBI's operating profit zoomed 31% to Rs 182 billion from Rs 139.1 billion. Domestic credit growth was at 8.43% at the end of September quarter mainly driven by retail-personal advances (up 18.9% YoY).

The public lender's asset quality also improved with the gross non-performing assets (GNPA) coming in at Rs 1.61 lakh crore, down nearly 5% QoQ, from Rs 1.68 lakh crore reported in Q1FY20.

GNPA ratio stood at 7.19% for the quarter under review, down 276 bps YoY and 34 bps sequentially.

Net NPAs came in at Rs 599.4 billion for Q2FY20. The same was Rs 656.2 billion in Q1FY20, and Rs 948.1 billion in the corresponding quarter of the previous fiscal.

Provision Coverage Ratio (PCR) significantly improved to 81.2% as on September 30, 2019 from 70.7% last year. Sequentially, PCR improved by 189 bps.

Fresh slippages halved to Rs 88 billion from Rs 160 billion on a quarterly basis. For the quarter ended September 2019, the bank made provisions of Rs 9.9 billion.

SBI share price ended the day up by 7.3%.

Speaking of the banking sector, it is interesting to note that public sector banks (PSBs) have struggled due to rising NPAs.

NBFCs have struggled after the IL&FS crisis and are wary to lend.

There has been a silver lining in this mess. i.e. the increased market share of private sector banks. This is evident in the chart below:

India's Credit Shift Megatrend

Since 2014, private banks have consistently gained market share mainly at the expense of PSU banks.

With PSU banks still struggling to get out of their NPA mess, this trend is set to continue.

One such good quality private bank makes it to Tanushree's top 7 stocks to buy list.

These 7 stocks will be a part of many such megatrends that will play out over the next decade in India.

Moving on to news from the pharma sector, shares of Strides Pharma Science witnessed buying interest today as the company reported net profit of Rs 470 million for Q2FY20 as against net loss of Rs 143 million for the same quarter in the previous year.

Total income of the company increased by 27.5% at Rs 4,576.1 million for Q2FY20 as compared Rs 3,587.9 million for the corresponding quarter previous year.

On a consolidated basis, the company reported net profit of Rs 1,419.1 million for the quarter under review as against net loss of Rs 87 million for the same quarter in the previous year.

Meanwhile, Piramal Enterprises, at its board meeting, approved preferential Compulsory Convertible Debentures (CCD) allotment to a Canadian institutional investor for a price consideration of Rs 17.5 billion.

In a BSE filing, the company said "the Board has approved fresh capital raise of Rs 54 billion through a Rights Issue and preferential allotment of CCDs. The Promoters will participate in and are committed to the success of the Rights Issue."

According to the company, the Rights Issue of Rs 36.5 billion, at Rs 1,300 per share would give an opportunity to all its existing shareholders to participate in the capital raise plan.

The Rights Issue will be completed by February 2020, while the CCD will be issued in November 2019 at 9.28% coupon rate and will be valid for 18 months since allotment.

Piramal Enterprises share price ended the day down by 8.5%.

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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