Sensex Regains 40,000-Mark in Opening Trade; Capital Goods & Telecom Stocks Lead

Wed, 30 Oct 09:30 am

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Asian share markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is down 0.3% while the Hang Seng is down 0.2%.

On Wall Street, the S&P 500 index eked out a record intraday high, led by strong earnings from drug manufacturers such as Merck and Pfizer, though a disappointing profit report from Google parent Alphabet kept the technology-rich Nasdaq in the red.

Back home, India share markets opened on a positive note. The BSE Sensex is trading up by 117 points while the NSE Nifty is trading up by 33 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.6% and 0.5%, respectively.

Sectoral indices have opened the day on a mixed note with capital goods stocks and telecom stocks witnessing maximum buying interest, while automobile stocks have opened in red.

The rupee is currently trading at 70.95 against the US$.

In news from the aviation sector, InterGlobe Aviation (IndiGo) share price is in focus today.

The operator of India's largest airline said it has placed an order for 300 Airbus A320neo family aircraft worth more than US$ 30 billion at list prices.

As per reports, this is Airbus's largest aircraft order from a single airline and will take IndiGo's total number of narrow-body A320neo family aircraft orders to 730.

IndiGo's latest order includes the new A321XLR long-range planes that can travel as far as 4,700 nautical miles (nm), or 8,700km, without refueling.

The order will allow IndiGo to replace its older A320ceo fleet by 2022. As of 30 September, the Gurugram-based airline had 245 aircraft in its fleet, consisting of 89 A320neo planes, 129 A320ceo planes, six A321neo planes and 21 ATR aircraft.

The company's CEO said, "the order is an important milestone as it reiterates our mission of strengthening air connectivity in India, which will in turn boost economic growth and mobility."

IndiGo share price has opened the day up by 2.7%.

Moving on to news from the banking sector, the Reserve Bank of India on Tuesday said it has imposed a monetary penalty of Rs 10 million on Bandhan Bank for non-compliance with the guidelines on promoter holding.

The bank was required to bring down the shareholding of its non-operative financial holding company in the bank in excess of 40% of the total paid-up equity capital to 40% within three years from the date of commencement.

Bandhan MFI had obtained in-principle universal banking license from the central bank in 2014 and started full-fledged operations as a bank from August 2015.

A show cause notice was issued to the bank by the RBI advising it to show cause as to why penalty should not be imposed for non-compliance with the said licensing guidelines.

The central bank in a release said, "after considering the reply received from the bank, submissions made by the bank during the personal hearing and the documents submitted by it, RBI came to the conclusion that the bank had failed to comply with the licensing guidelines read with the licensing conditions imposed by RBI and decided to impose a monetary penalty on the bank."

Bandhan Bank had recently merged with Gruh Finance, which brought down the shareholding of the promoter from 82.26% to 60.96%.

The lender had earlier said it was making efforts to further reduce the shareholding to 40%.

Bandhan Bank share price has opened the day down by 2.9%.

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.

Stocks such as Yes Bank and Lakshmi Vilas Bank are down more than 70%.

Falling Knives in the Banking Sector

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.

But if you're thinking of buying these stocks it's important to remember this point - If a stock is in a falling spree, there's probably a good reason behind it.

And realising this in a falling market is the first step towards correcting one's investing process.

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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