Sensex Jumps 110 Points to End at Record High; Telecom and Metal Stocks Rally

Thu, 28 Nov Closing

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Indian share markets traded on a positive note most of the day and ended higher. Gains were largely seen in the telecom sector, metal sector and realty sector, while automobile stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 110 points and the NSE Nifty closed higher by 54 points. The BSE Mid Cap index ended the day up 1%, while the BSE Small Cap index ended the day up by 0.5%.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.2% and the Shanghai Composite stood lower by 0.5%. The Nikkei 225 was down 0.1%.

The rupee was trading at 71.63 against the US$.

Note that, hopes of an economic recovery over next few quarters on the back of various measures announced by the government, including corporate tax rate cut has pushed Indian markets to new highs.

Foreign portfolio investors (FPIs) also turned net buyers of Indian equities after being net sellers in July and August.

As the Indian stock markets touch new record highs, 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 media sector, Zee Entertainment share price witnessed selling pressure today.

The company on Wednesday said three directors have resigned from its board, two of them citing related-party transactions, among other reasons, for quitting.

The company said independent directors Neharika Vohra and Sunil Sharma had stepped down on November 22 and November 24, respectively. Non-independent director Subodh Kumar had also resigned on the same day that Vohra stepped down.

It added that the disclosures were part of its corporate governance policy.

Note that this disclosure comes two days after Subhash Chandra stepped down as chairman of the board. Zee had also reconstituted its board on Monday, appointing three independent directors - IAS officer R Gopalan, retired IPS officer Surendra Singh, and art collector Aparajita Jain.

Kumar and Vohra said film advances were given from 2018 to 2019 amounting to Rs 22 billion. They also said the management had not taken legal action against a bank which had appropriated Rs 2 billion of the company's fixed deposits towards promoter loans.

Further, they added that the company has not taken action against Dish TV and Siti Cable for outstanding amounts they owed to the company as well as for lack of clarity on how corporate social responsibility (CSR) amounts were spent by the company.

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

Moving on to news from the banking sector, State Bank of India (SBI) share price was in focus today.

SBI Cards and Payment Services, the credit card unit of SBI on Wednesday, filed initial share sale documents that could see the company sell shares worth around Rs 96 billion.

As per reports, the share sale is poised to become the fifth-largest IPO in the country after Coal India, Reliance Power, GIC of India, and ONGC.

SBI, which holds 74% stake in the unit along with private equity firm Carlyle Group, which holds the rest 26% through its subsidiary CA Rover Holdings, will together sell 130.5 million shares through the IPO.

The initial share sale also includes a fresh issue of shares that will see the company raise Rs 5 billion to augment its capital base and for business growth.

As of 30 September 2019, SBI Cards had a 18% share of the Indian credit card market, the second largest credit card issuer in India with 9.46 million credit cards.

HDFC Bank has the largest credit cards business in the country with 13.3 million cards issued, while ICICI Bank stood third with 7.9 million credit cards, according to data from the Reserve Bank of India.

In other news, shares of public sector banks (PSBs) witnessed buying interest today amid expectation of improvement in operational performance with receding fears of non-performing loans (NPL).

Oriental Bank of Commerce, Punjab National Bank, and Union Bank of India rallied over 5% today on back of the above news.

Note that, PSBs have rallied in the past two weeks on hopes that the Supreme Court ruling in Essar Steel case should pave the way for a lumpy recovery for banks in Q3, apart from some non-National Company Law Tribunal (NCLT) resolutions in the power sector.

Speaking of fitter PSBs, which banks look the best match post the latest matchmaking of PSU banks?

Needless to say, most investors would also be worried about the level of NPAs and current and savings accounts (CASA) of the merged entities.

Lower NPA ratio and sustenance of high CASA, in the future, could signal the banks' fitness levels to lend more.

But what could go unnoticed is the efficiency potential of the merged entities.

Post-merger, the employee per branch ratio of the consolidated PSU entities could be in the range of 7 to 9 per branch. This would be almost half that of their private sector counterparts like HDFC Bank and Kotak Bank.

India's Top 6 Public Sector Banks Are Getting Fitter

Leaner operations would mean use of technology to support growth.

So, we would not be surprised if the PSU entities leverage technology at a much bigger scale than their private sector peers, in a few years.

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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