Indian Markets Slip into the Red

Thu, 29 Oct 11:30 am

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After opening the day on a flattish note, the Indian Indices added to their losses and are presently trading in the red. Sectoral indices are trading on a mixed note with capital goods and banking sector leading the losers. consumer durables sector, on the other hand, is witnessing buying interest.

The BSE-Sensex is trading lower by 85 points (down 0.3%) and the NSE-Nifty is trading down by 28 points (down 0.3%). The S&P BSE Midcap index is trading down by 0.1% while the S&P BSE Smallcap index is trading up by 0.3%. The rupee is trading at 65.11 to the US$.

Banking stocks are trading on a negative note with Axis Bank and IndusInd Bank leading the losers. According to a leading economic daily, country's third largest private sector lender Axis Bank is planning to raise Rs 30 billion by way of infrastructure bonds. The tenure of the bonds would be 10 years and the issue would be priced at 8.25%. The bond has been rated AAA by ICRA and CRISIL. The issue is open and would close for subscription on Thursday.

Prior to this, in December last year, the bank had raised Rs 57 billion by issuing long term infrastructure bonds for a 10-year period.

On a separate note, shares of the bank were witnessing selling pressure yesterday on rising concerns over its asset quality. Slippages, excluding sale to asset restructuring company, declined sequentially to Rs 5.9 billion. However, during the quarter, the bank has sold Rs 18.2 billion of loans to ARC for net consideration of Rs 6.5 billion. Loss on sale has been absorbed in quarter ended September using Rs 8.5 billion of contingency provisions and Rs 3.4 billion additional NPA provisions.

The bank has also announced its results for the second quarter of FY16 recently. It reported 18.9% YoY growth in its net profit. This was aided by other income, operating profit and lower provisions but impacted by higher tax costs. Net interest income grew by 15.2% on a YoY basis driven by strong growth in advances.

Presently, the stock of Axis Bank is trading down by 2.5%.

Stocks in the automobile space are trading on a mixed note with Tata Motors leading the gains and TVS Motors leading the losses. As per an article in Economic Times, Mahindra First Choice Services (MFCS), a subsidiary of Mahindra & Mahindra (M&M), is eyeing a big space in the car service industry. For this, the company had opened 20 company-owned-company-operated (COCO) workshops and 200 franchisees across the country. Further, another 300 such units would start working by the end of next fiscal.

At present, the after-market car service industry is worth Rs 200 billion. Out of this, half is taken away by the local garages. The company is looking to expand its space amid this opportunity. It is aiming to increase its topline by 50% to Rs 750 million by the end of FY16.

It is also aiming a fast growth in turnover on the back of its aggressive expansion plans for its workshop network. To achieve this, the company has stated that it will complete back-end-support to the franchisee workshops and should be able to recover their investments in two to three years. The workshops would give service for all brands of cars besides Mahindra.

Scrip of M&M is trading down by nearly 0.3%.