MARKET WRAP: Sensex falls 537 pts, Nifty ends at 10,975 as financials crack

In the broader markets, the S&P BSE MidCap index settled 2.4 per cent lower while the S&P BSE SmallCap index slipped 2.7 per cent on Monday.

3:47 PM

Nifty Bank ends 2.62% lower. Top losers:

COMPANY	LATEST	PREV CLOSE	LOSS( )	LOSS(%)	VOLUME
RBL BANK	528.70	564.60	-35.90	-6.36	2439591
PUNJAB NATL.BANK	68.85	72.85	-4.00	-5.49	37473021
INDUSIND BANK	1674.20	1762.45	-88.25	-5.01	4685458
IDFC BANK	38.55	40.50	-1.95	-4.81	13407362

3:41 PM

Nifty sectoral losers of the day

3:39 PM

BSE Sensex: HDFC, M&M, IndusInd Bank among top losers of the day

3:32 PM

Market at close

 

The S&P BSE Sensex ended at 36,305, down 537 points while the broader Nifty50 index settled at 10,975, down 168 points.

3:17 PM

DHFL, Infibeam Avenues, ITNL up over 10% after Friday's fall

Shares of Dewan Housing Finance Limited (DHFL), Infibeam Avenues and IL&FS Transportation Networks were trading over 10% higher on back of heavy volumes on Monday, after crashing up to 42% on Friday on the BSE.
 

DHFL has surged 25% to Rs 439 on the BSE in intra-day trade after the company said it has received re-affirmation of credit ratings from CARE and ICRA. The stock rallied 78% from its 52-week low of Rs 246 touched on September 21 during intra-day trade. READ MORE

3:00 PM

A shadow looms: India needs to stop the IL&FS rot from spreading

A tad late, but the message is finally reaching India’s regulators: Infrastructure lender IL&FS is not a business that can be allowed to fail without consequences. An unusual Sunday evening joint statement by the securities regulator and the central bank suggests a much-needed awareness of systemic risks.

 

Infrastructure Leasing & Financial Services Ltd. is a sprawling nonbank institution that used its highly rated paper to chalk up $12.5 billion of debt, which it funneled into the financing of long-term assets like roads, townships and water-treatment plants. Most of these businesses are owned by IL&FS-linked operating companies. READ MORE

2:44 PM

NBFCs are a high-risk bet now; bottom-fishing here is fraught with risks

Do non-banking financial companies (NBFCs) and housing finance companies (NFCs) offer good entry points at recent dips post Friday’s free-fall? Well, investors should consider some key points before bottom fishing in these stocks.

 

Friday’s fall was not on account of systematic crisis or any fundamental concerns on part of these packs, say experts. Liquidity and profitability concerns weighed on these two packs. Thus, asset-liability management (ALM) is critical to understand. READ MORE

2:31 PM

IL&FS crisis: Was correction in NBFC stocks overdue, given rich valuations?

A sharp decline in share prices of non-banking finance companies (NBFCs) on Friday is forcing some analysts to ask the obvious question: Was the correction overdue, given the sector’s rich valuation despite the steady rise in bond yields, which is set to raise lenders’ cost of funds, adversely affecting their margins? The country's top retail NBFCs are trading at 23.5 times their trailing 12-months earnings nearly 500 basis points higher than the sector's 15-year average price to earnings multiple of 18.4 times. READ MORE

2:18 PM

Analysts see more downside for markets; remain selective on banks & NBFCs

Indian equity markets extended their slump for the fifth consecutive session as financial stocks continued to tumble amid the ongoing crisis at IL&FS. The S&P BSE Sensex hit an intra-day low of 36,239 levels, while the Nifty50 touched a low of 10,946 levels.

 

Analysts say the markets (S&P BSE Sensex is down over 800 points in two sessions) have been caught in a contagion of a sell-off in banking and NBFC segments, which can accentuate further. Moreover, factors such as rate hikes by the US Federal Reserve, crude oil prices, rupee and trade relations between US and China will also have a bearing on the overall sentiment. READ MORE

2:03 PM

NEWS ALERT Brent crude oil rises to $80.51 per bbl, highest since November 2014, according to TV reports

1:59 PM

Market Check

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	36,266.52	-575.08	-1.56
S&P BSE SENSEX 50	11,471.37	-182.57	-1.57
S&P BSE SENSEX Next 50	32,233.56	-896.95	-2.71
S&P BSE 100	11,208.53	-198.12	-1.74
S&P BSE Bharat 22 Index	3,516.41	-42.73	-1.20

(Source: BSE)

1:44 PM

Maruti Suzuki, YES Bank, Jet Airways, Godrej Properties hit 52-week low

Shares of YES Bank, Maruti Suzuki India, Jet Airways, Godrej Properties, Finolex Industries, Edelweiss Financial Services and Eveready Industries are among 68 stocks from the Nifty 500 index that have hit their respective 52-week low as the benchmark indices trade 1% down tracking weakness in Asian markets.
 

Reliance Capital, Reliance Power and Reliance Infrastructure from Anil Ambani Group, Allahabad Bank, Central Bank of India, Karnataka Bank, Karur Vysya Bank, Ujjivan Financial Services, IFCI, Manappuram Finance and PNB Housing Finance from the financials too hit 52-week lows today. READ MORE

1:30 PM

Raymond m-cap doubles on strong profit growth, firm to expand across India

Fabric and apparel maker Raymond has seen its market capitalisation double to Rs 46 billion over the past two and a half years, outperforming most peers. Even as the compound annual growth rate (CAGR) in revenue was just 3 per cent, net profit grew 26 per cent a year.

 

Raymond’s performance comes on the back of its asset-light retail expansion, continued growth by existing apparel brands, and steady B2B numbers despite demonetisation hurting apparel players. READ MORE

1:18 PM

Investors in large MF schemes to gain most as Sebi cuts total expense ratio

The Securities and Exchange Board of India (Sebi) has announced cut in total expense ratio (TER) for equity mutual fund schemes. The cut in TER—the fees charged to investors by a fund house—will have to be done at a scheme level as per slabs set by the regulator.

 

An analysis by Prabhudas Lilladher shows schemes with large corpus will see highest reduction in TER of up to 25 basis points. READ MORE

1:06 PM

Nifty Bank trades nearly 2% lower. Top losers:

COMPANY	LATEST	PREV CLOSE	LOSS( )	LOSS(%)	VOLUME
RBL BANK	538.55	564.60	-26.05	-4.61	1472263
INDUSIND BANK	1688.30	1762.45	-74.15	-4.21	2512249
PUNJAB NATL.BANK	70.10	72.85	-2.75	-3.77	26185713
IDFC BANK	39.10	40.50	-1.40	-3.46	8950823
BANK OF BARODA	108.45	111.45	-3.00	-2.69	20631473

12:59 PM

Why YES Bank, DHFL did not hit lower circuit limits on Friday?

Equity market witnessed a roller coaster ride on Friday with stocks across the board falling like a pack of cards. The S&P BSE Sensex saw a jaw-dropping 1,500-point swing, while shares of YES Bank and DHFL, bled a whopping 34 per cent and 60 per cent, respectively in intraday trade before recovering a bit.
 

However, the trend left many of us thinking why these stocks did not hit lower circuit limits, like it happens usually. Also, what are circuit filters/circuit limits, what are its significance and how do they work? READ HERE

12:39 PM

TCS hits new high; Infosys up 3% in a weak market

Shares of information technology (IT) companies were trading higher in an otherwise weak market on Monday after the Reserve Bank of India (RBI) shortlisted five IT firms including Infosys and Tata Consultancy Services (TCS) for implementation of a centralised information and management system (CIMS) for seamless data collection and validations. IT giant TCS hit a new high of Rs 2,172, up 3%, extending its Friday’s 1.3% gain on the BSE. READ MORE

12:31 PM

Crude oil update

Oil prices gained as OPEC's leader Saudi Arabia and its biggest oil-producer ally outside the group Russia effectively rebuffed US President Donald Trump's calls for action to lower prices.

 

Brent crude futures gained $1.03 to $79.83 a barrel, while US crude futures rose 80 cents to $71.58.

12:13 PM

China accuses US of 'trade bullyism' as both sides impose fresh tariffs

The United States and China imposed fresh tariffs on each other's goods on Monday, as the world's biggest economies showed no signs of backing down from an increasing bitter trade dispute that is expected to knock global economic growth. READ MORE

12:09 PM

Govt to take all measures to ensure liquidity for NBFCs, MFs: Arun Jaitley

Seeking to calm the nerves of worried investors, Finance Minister Arun Jaitley said on Monday that the government would take all measures to ensure adequate liquidity for non-banking financial companies (NBFCs) and mutual funds.

 

The minister's remarks come in the wake of stock markets witnessing sudden and stiff fall in intra-day trade on Friday over concerns of liquidity crisis being faced by some of the NBFCs. READ MORE

12:00 PM

Market at Noon

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	36,513.52	-328.08	-0.89
S&P BSE SENSEX 50	11,537.38	-116.56	-1.00
S&P BSE SENSEX Next 50	32,322.99	-807.52	-2.44
S&P BSE 100	11,268.01	-138.64	-1.22
S&P BSE Bharat 22 Index	3,544.64	-14.50	-0.41

(Source: BSE)

11:50 AM

Stock of the day NBFCs extend fall

 

Shares of non-banking financial companies (NBFCs), including housing finance companies (HFCs), continue to remain under pressure for the fifth straight trading day on the bourses amid the ongoing crisis at the Infrastructure Leasing and Financial Services Ltd (IL&FS).

 

Bajaj Finance, Indiabulls Housing Finance, Reliance Home Finance, Central Bank of India, Cholamandalam Investment and Finance Company and Ujjivan Financial Services were down in the range of 5% to 15% on the National Stock Exchange (NSE) in intra-day trade. READ MORE

11:37 AM

WEB EXCLUSIVE As competition in NBFC space rises, asset quality bound to take a hit, writes Ambareesh Baliga

Last week, we witnessed the contagion effect of the tightness in money market amid continuing financial crisis at IL&FS. This led to stock prices of most Housing Finance and NBFCs witnessing heavy selling losing 10-60 per cent range of Rs 2-3 bn) in the secondary market at a higher yield due to tight liquidity in the system. Other housing finance companies and NBFCs too witnessed sell-off, as borrowing cost for NBFCs is expected to rise and they could face challenges in raising funds. Commercial papers is a major source of funding for NBFCs and HFCs READ MORE HERE

11:25 AM

Investec Securities on NBFCs

NBFC stocks were hit on Friday driven by liquidity concerns, rising funding costs, wide conjecture and valuation concerns. Analysing system liquidity and interest rates, we see there’s nothing to be alarmed about (nowhere close to August 2013). With respect to NBFCs, the liquidity and capital position looks comfortable with majorly retail assets and some funded by retail liabilities.

Even in stress scenario of incremental cost of funding going up by 250bps, NBFCs are expected to remain profitable. Valuations declined in the last twelve months with several now trading below the mean. NBFCs’ high dependence on corporate debt markets is a concern. NBFCs with strong parentage and deposit franchise are well placed if liquidity tightens further.

11:24 AM

Sector watch: NBFCs

The recent correction on the back of debt market liquidity concerns prompts us to review a few strong NBFCs. Several factors including business tailwinds, robust operating models catering to the retail segment and parental support provide comfort to banks/debt markets and ensure that liquidity remains strong; stress, if any, remains only to near-term NIM.

In the context of current valuations, we see a case for several upgrades: Chola (ADD from REDUCE; TP of Rs1,425, down from Rs1,500), LICHF (BUY from ADD with TP of Rs580), Mahindra Finance (ADD from REDUCE; TP of Rs450 versus Rs500 earlier) and Shriram Transport Finance (BUY from ADD; TP of Rs1,450, down from Rs1,550).

(Source: Kotak Securities report)

11:15 AM

How not to arrest the rupee's fall

The measures to bring more inflow include review of the mandatory hedging conditions for external borrowing. Also, permission for manufacturing companies to raise up to $50 million (Rs 3.6 billion) through such loans for a minimum period of a year, as compared to three years earlier.

 

Plus, review of the cap on exposure of foreign portfolio investors in bonds of a business group and exemption from withholding tax for ‘masala’ bonds (issued outside India but denominated in rupees). READ MORE

10:57 AM

Devangshu Datta Govt banks have 90% of NPAs

The Reserve Bank of India’s (RBI’s) actions in punishing Axis Bank and Yes Bank, for under-reporting non-performing assets (NPAs), signals that it wants to get tough. Unfortunately, it is not in a position to do this in the same way with public sector banks where the rot in terms of under-reported NPAs is probably a lot worse. The market response to the news was also interesting and perhaps, a little puzzling. READ MORE

10:44 AM

HUL stock: Volumes and margins to improve on higher demand, price hikes

Hindustan Unilever has underperformed its peer index, the BSE FMCG, in recent weeks correcting about 11 per cent as compared to the 6 per cent fall for the index.

 

In addition to the worries on pricey valuations of the sector, the Street was worried about the ability of the company to maintain margins, given higher crude oil prices, a weak rupee and more importantly HUL’s ability to maintain volumes in view of recent price hikes. READ MORE

10:33 AM

TD Power Systems extends gains as board mulls share buyback proposal

Shares of TD Power Systems have surged 19% to Rs 137 per share in early morning trade on Monday, extending their 5% gain on the BSE on Friday after the company said that its board will meet on Wednesday, September 26, to consider share buyback proposal. READ MORE

10:22 AM

Usha Martin hits 52-week high as Tata Steel to acquire steel business

Shares of Usha Martin hit a 52-week high of Rs 36.40 per share, up 16% on the BSE in the opening deal after Tata Steel has executed a definitive agreement for the acquisition of the company’s steel business through a slump sale on a going concern basis. READ MORE