Sensex Trades on a Volatile Note; Bharti Airtel & IndusInd Bank Top Losers

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Share markets in India are presently trading on a volatile note. Sectoral indices are trading mixed with stocks in the telecom sector and metal sector witnessing selling pressure, while IT stocks are witnessing buying interest.

The BSE Sensex is trading down by 27 points (down 0.1%), while the NSE Nifty is trading down by 13 points (down 0.1%). Both, the BSE Mid Cap index and the BSE Small Cap index are trading up by 0.1%.

The rupee is currently trading at Rs 72.06 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 pharma sector, Cadila Healthcare has acquired the remaining 15% stake in its subsidiaries Zydus Technologies and Zydus Noveltech Inc for a combined value of US$ 250,000 from strategic and minority partner Sharad Govil.

The company in a filing said it acquired Zydus Technologies for US$ 225,000 and Zydus Noveltech for US$ 25,000.

Following the acquisition of the stake, the two companies will become wholly owned subsidiaries of Cadila Healthcare.

Reports state that the company is also planning to merge with Zydus Technologies, in order to consolidate its transdermal business and simplify its corporate structure.

Cadila Healthcare share price is presently trading up by 3.9%.

Moving on to news from the banking sector, Yes Bank's statutory auditor has sought a fresh audit into whistleblower complaints levelled against the bank and its founder Rana Kapoor after a special audit done by JLN US & Co. turned out to be inconclusive.

Reportedly, the whistleblower had raised allegations of irregularities in the bank's operations, potential conflict of interests in relation to Kapoor and misclassification of bad loans.

The audit committee of the private lender has ordered special audit into the complaints received in September 2018.

Note that the bank had conducted an internal inquiry into these allegations, carried out by the management led by Kapoor and supervised by the board. The inquiry resulted in a report that was reviewed by the board in November 2018.

The special audit confirmed the complaint that exorbitant payouts were made to some employees, like Kapoor's executive assistant Lata Dave; Amit Shah, former group president and head of marketing and communication; Rajat Monga, former senior group president and chief financial officer; Ashish Agarwal, former chief risk officer, among others.

Following this, Yes Bank's statutory auditor BSR & Co. said that the audit report was unacceptable and has sought a fresh audit with expanded terms of reference.

Yesterday, it was reported that Sunil Munjal, chairman of Hero Corporate Services, and Hemendra Kothari, veteran investment banker and founder of DSP Group, have held separate talks with the cash-starved private sector lender to purchase stakes of 5-10% each.

The two businessmen expressed their intention to invest following discussions over the past fortnight. If both investments proceed, the bank could receive a total sum of up to Rs 35 billion.

Note that Yes Bank is in need of money to stay compliant with RBI's capital adequacy norms and create enough buffers to provision against bad loans in the coming quarters.

As of the September quarter, Yes Bank's tier I capital adequacy ratio stood at 11.5% against the regulatory requirement of 8.875%.

Its common equity tier 1 capital stood at 8.7%, marginally above the regulatory requirement of 7.375%.

The bank has met at least half-a-dozen large private equity firms and about a dozen foreign family offices since August.

How the above investment talks advance remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Speaking of Yes Bank, Ankit Shah shares an interesting observation in the private sector bank's shareholding pattern over the last one year.

Here's what he wrote about it in a recent edition of The 5 Minute WrapUp...

• What I found made me nervous and worried - individual investors have been the worst hit by the Yes Bank share price crash.
  
  The chart shows the number of shares held by individual shareholders holding nominal share capital up to Rs 1 lakh.

Yes Bank Crash: Who's Been the Worst Hit?

As you can see, the total shares held by individual shareholders holding nominal share capital up to Rs 1 lakh increased from 14.5 crore shares at the end of June 2018 to 43.4 crore at the end of June 2019. That's a drastic 200% jump in just one year.

Even the total number of individual shareholders that held Yes Bank shares increased by 195% from 3.76 lakh at the end of June 2018 to 11.08 lakh at the end of June 2019.

The key takeaway here for all individual investors is to not confuse the cheapness in share price for cheapness in valuations. Do not blindly buy shares of battered stocks expecting them to rebound to their earlier levels.

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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