Sensex Ends 199 Points Higher; Automobile and Energy Stocks Witness Buying

Wed, 27 Nov Closing

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Indian share markets traded on a positive note throughout the day and ended higher. Gains were largely seen in the automobile sector and energy sector, while capital goods stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 199 points (up 0.5%) and the NSE Nifty closed higher by 63 points (up 0.5%). The BSE Mid Cap index ended the day up by 0.8%, while the BSE Small Cap index ended up by 0.2%.

Asian stock markets finished on a positive note as of the most recent closing prices. The Hang Seng was up 0.2% and the Nikkei was up 0.3%.

The rupee was trading at 71.35 to the US$ at the time of writing.

Note that the BSE Sensex crossed the 41,000 mark yesterday for the first time. As the Sensex crosses 41,000 levels and Nifty touches a new record high, Tanushree Banerjee talks about the trends and stocks that have huge profit potential.

One of the trends she talks about is the privatisation of PSUs.

She talks about the huge potential of this sector and the stocks that could be the big winners!

Tune in...

In news from the automobile sector, shares of Ashok Leyland climbed 3% in early trade today after the company said it has bagged an order to supply 1,750 buses to Tamil Nadu State Transport Undertakings.

In a filing to exchanges, the flagship company of Hinduja Group said, "this deal comes close on the heels of other orders received from various state transport undertakings recently".

However, the company did not disclose the financial details of the deal.

Earlier this week on Monday, the company had signed a Memorandum of Understanding (MoU), with ICICI Bank to enter into a strategic financing partnership for two years.

Ashok Leyland share price ended the day up by 1.6%.

In other news, shares of automobile and auto-ancillary companies were trading on a positive note today amid reports that the Cabinet may consider approving scrappage policy.

According to a report, discounts may be offered on buying new in exchange for old cars. Proposal is to offer road tax discounts on exchange of old for new cars.

The report further added that registration charge may be removed for exchanged of old to new cars; there may be heavy road tax on cars older than 15 years. Proposal is to charge 25 times original registration charges on old cars.

Shares of Eicher Motors, Maruti Suzuki and Tata Motors surged up to 3% on back of the above news.

Note that multiple factors have affected the auto sector of late. The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms...they have all taken their toll.

The industry's sales and production levels have plunged, leading to job losses. In August, all major OEMs consisting of passenger, commercial, two and three-wheeler manufacturers have reported a massive decline in domestic sales.

On 20 September, the government had reduced corporate tax rates from 30% to 22% to boost consumer demand and increase spending by private companies. The effective tax to be paid by the companies, including surcharge and cess, will be 25.17%.

However, in the euphoria of the government's tax rate cuts, an important announcement went unnoticed.

The road transport and highways ministry has proposed a huge increase in re-registration of vehicles which are more than 15 years old.

The proposed hike will be implemented from July 2020. The policy change is aimed at reducing pollution by scrapping older vehicles on the road.

As per Co-head of Research, Tanushree Banerjee, this might come as a welcome relief for automakers who have seen severe fall in sales over the past 1 year.

Signs of Revival in the Auto Sector

Here's what she wrote about it in one of the editions of The 5 Minute WrapUp...

• The upcoming festive season and the recent policy measures might just be the trigger needed to revive the sector.
  
  A leading auto player makes it to my list of 7 stocks to buy.
  
  I believe, rising disposable incomes and aspirations of India's youth, will be the key trends benefiting this market leader in the long run.

As per Tanushree, these are just some of the trends that will play a big part in the Sensex 1,00,000 journey.

Moving on to news from the banking sector, Yes Bank share price was in focus today.

Shares of the private lender climbed 9% intraday today after it announced that its board will meet on Friday to consider raising of funds.

Yes Bank in a regulatory filing said that, "a meeting of the board of directors of YES Bank will be held on Friday, November 29, 2019 to discuss and consider raising of funds by issue of equity/ equity linked securities through permissible modes".

Last month, the private lender had informed the exchanges that it has received a binding offer from a global investor for an investment of US$ 1.2 billion in the bank through fresh issuance of equity shares.

The bank received strong interest from multiple foreign as well as domestic private equity and strategic investors for the capital raise.

Yes Bank publicly disclosed that the binding offer is valid until 30 November 2019.

Rating agency ICRA said it will downgrade the ratings if there is no progress on the capital raise proposed by the bank.

Further, in a scenario of capital raise, the bank will have to reduce its share of stressed assets, given the sizeable quantum of stressed assets.

How the fund-raising pans out remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

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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