RIL, Bajaj Finance power 777-pt rally in Sensex; Nifty holds 17,200

 An alleviation rally in worldwide business sectors assisted the Indian values with snapping their two-day long string of failures. The S&P BSE Sensex flooded 777 focuses, or 1.37 percent, to end at 57,357 levels on Tuesday while the Nifty50 shut shop at 17,200, up 246 places or 1.45 percent.

Adani Ports, Bajaj Auto, legend MotoCorp, Power Grid, M&M, Titan, Tata Consumer Products, IndusInd Bank, Reliance Industries, and Bajaj Finance flooded between 3.5 percent and 5.8 percent. HDFC Life, Cipla, L&T, Divis Labs, Bharti Airtel, Britannia, HUL, Tata Motors, SBI, and Shree Cement, in the interim, mobilized as much as 2%.

Just ONGC, Apollo Hospitals, Axis Bank, Maruti Suzuki, Hindalco, Wipro, Asian Paints, and TCS finished losing money, down up to 2 percent.

In the more extensive business sectors, the BSE MidCap record added 1.6 percent and the BSE SmallCap added 0.7 percent. Sectorally, all the records finished in the green zone, drove by the Nifty Realty and Auto files, up 3.5 percent and 3 percent, individually....

RBI rate cut, government stimulus done. What are the markets eyeing now?

After the relief package by the government for the poor and the marginalized sections of society and a series of liquidity enhancing measure by the Reserve Bank of India (RBI) announced over the past few weeks, the central bank slashed rates by a 75 basis points (bps) – the most aggressive cut in the last 10 years. That apart, the RBI put a moratorium on all equated monthly installments (EMIs) on loans to ease the borrower’s pain.
On their part, the Indian markets which expected the authorities to roll out measures to stem the fall and stabilise sentiment after the over 35 per cent fall from the peak levels seen earlier this year triggered by the sudden and rampant spread of coronavirus (Covid-19) pandemic across the globe, witnessed profit booking. The S&P BSE Sensex slipped 1,310 points from the day’s high to close marginally negative on Friday post the RBI’s measures.
With these expected stimulus measures out of the way, will the markets continue on their journey south? What are the cues they will keep a tab on?
Over the next few weeks, analysts expect the markets to remain volatile and now track developments related to Covid-19 across the globe and how fast & successfully the governments are able to combat the pandemic. Back home, the 21 day lockdown imposed by the government and the possibility of an extension in the same will sway investor sentiment, they say.
As regards policies, most expect this to be an ongoing process – at least till the time the economy is up and running. They, however, caution that the government could run out of dry powder soon in its fight against Covid-19 given the fiscal situation and the fact that the Indian economy was already slowing down ahead of this pandemic.
“We expect coordinated fiscal and monetary easing to continue. We believe the next tranche of fiscal measures will address cash-flow challenges faced by SMEs and other hard-hit industries. Amid weak growth, we believe the government may temporarily suspend the FRBM legislation and the central government’s fiscal deficit is likely to rise to around 5 per cent of GDP in FY21 versus 3.5 per cent budgeted,” wrote Sonal Varma, managing director and chief India economist at Nomura in a co-authored report with Aurodeep Nandi.
They now expect a further 75 bps cut in repo rate in the second and the third quarter of 2020 (Q2-Q3/2020). On unconventional policies, they see more aggressive open market operations, further liquidity injections via targeted longer-term refinancing operations (TLTROs), including expanding its scope to target banks loans.
Those at BofA Securities, too, share a similar view and expect the RBI to remain aggressive as regards its policies. They expect the central bank to cut rates by 25bp each in June and October and peg the inflation rate at 2.5 per cent in the second half of financial year 2020-21 (H2FY21).

“We now see its 2020 rate cuts totaling 125bp up from 100bp. This, in turn, will take the RBI reverse repo rate to 3.5 per cent, close to 2009's 3.25 per cent low. We have cut down our FY21 growth forecast to 4 per cent,” wrote Indranil Sen Gupta, India economist at BofA Securities, in a co-authored report with Aastha Gudwani.

SBI Cards lists 12% below issue price of Rs 755; recovers later

Current Affairs
Portions of SBI Cards and Payment Services (SBI Cards) recorded at Rs 661, 12.45 percent beneath its issue cost of Rs 755 on the National Stock Exchange (NSE) on Monday. On the BSE, it opened at Rs 658, 13 percent lower against issue cost.
Be that as it may, at 10:09 am, the stock was exchanging at Rs 751, in the wake of hitting a high of Rs 754 on the BSE. A consolidated around 26 million offers have changed hands on the counter on both the trades up until now.
The stock saw a frail introduction because of winning economic situation as the vulnerability with respect with the impact of the coronavirus plague kept on holding financial specialist notion in line. The benchmark files Nifty50 and S&P BSE Sensex have declined 16.6 percent since the SBI Card starting open offer (IPO) opened for membership on March 2, 2020. The records have failed almost 21 percent, since the charge card arm of the State Bank of India (SBI) documented Draft Red Herring Prospectus (DRHP) for its IPO with Sebi on February 26.
Practically all financiers were certain on the underlying open offer (IPO) and some had anticipated up to 60 percent upside from the IPO value scope of Rs 750-755, given its prevailing situation in the Mastercard showcase and solid parentage, SBI Cards is very much set to profit by the rising pattern of advanced installments and internet business.

SBI Card's IPO had figured out how to pull in offers worth Rs 2 trillion, disregarding testing economic situations. The 100-million offer contribution created near 2.7 billion offers (multiple times). The certified institutional purchasers (QIBs) segment of the IPO was bought in multiple times, trailed by high networth individual (HNI) (multiple times) and investors (25.4 occasions). The representative fragment enrolled 4.7 occasions membership, while the retail partition being bought in 2.5 occasions...Read More

HDFC Life, SBI Life: Has Chris Wood made a wrong investment call?

Current Affairs
In the course of recent months, Christopher Wood, worldwide head of value system at Jefferies stirred introduction to Indian stocks in his Asia ex-Japan portfolio for long-just supreme return financial specialists. The worldwide speculator purchased SBI Life Insurance and HDFC Life Insurance, which currently represent 5 percent and 4 percent weight in the previously mentioned portfolio.
The ongoing recommendations came out of nowhere for the life coverage organizations when the Budget presented a discretionary system for individual annual duty (I-T), which while bringing down rates, removed most exceptions and reasonings that individual citizens could benefit. This, thusly, could affect offers of protection items. An automatic response saw loads of private life back up plans - HDFC Life, SBI Life, ICICI Prudential Life (I-Pru Life) and Max Financial Services (holding organization of Max Life Insurance) plunge 6–13 percent at the bourses on Saturday. Monday, be that as it may, saw an incomplete recuperation in these counters.
In the present expense system, Unit-connected protection plans (ULIPs) meet all requirements for an exclusion/reasoning up to Rs 150,000. As per reports, a near investigation of the discretionary new and unique annual assessment systems represents that the more seasoned duty system (on benefiting everything being equal) makes a lower charge obligation than the one proposed. An enormous piece of the ULIP deals occurs in the final quarter — frequently connected to individual personal assessment arranging. This part of ULIP request currently goes under a long haul shadow, experts state.

The Indian protection industry is fundamentally investment funds situated and however development in the security business has been solid, its offer altogether new business stays low....READ MORE

India tycoons running out of time with debt dagger hanging over stocks

International News

Indian media giant Essel Group, run by industry mogul Subhash Chandra, is seeking an extension to repay debt in order to avoid creditors liquidating its shares.
The company faces a month-end debt repayment deadline. If that’s not met, creditors can sell shares in the group’s flagship Zee Entertainment Enterprises Ltd. kept as collateral against loans. The case highlights broader risks that borrowings backed by stock pose to the equity market. There’s a lot at stake with share-backed loans currently at about 1.9 trillion rupees ($26.5 billion).
Essel Group’s Chandra is seeking to sell assets ranging from a stake in the nation’s most valuable publicly traded TV network to roads. Shares of his Zee Entertainment Enterprises Ltd. have plummeted to the lowest level in five years.“We have certainly discussed the point pertaining to the extension as well, purely in the interest of deriving the right value for the precious assets,” said Punit Goenka, managing director and chief executive officer at Zee Enterprises in an emailed response, “The lenders have noted our view and have been extremely supportive.”
The media tycoon’s challenge is the first of what could be a string of tests this year for beleaguered business titans from Anil Ambani to the founders of the Emami Group. They have raised funds to expand their empires by pledging equity stakes in their firms and the clock is ticking as repayment dates loom.
Risks Mount

 “Not everybody is going to come out of this alive,” said Jayanth R Varma, a professor at the Indian Institute of Management in Ahmedabad, referring to the founder’s funding predicament. “I can’t imagine that all the groups that are in trouble today will be able to sort out their mess.”...Read More

Auto stocks slide on report GST Council unlikely to back tax cut for sector

International News

Shares of automobile companies, including auto ancillary firms, traded lower on Wednesday on report that the goods and services tax (GST) panel is unlikely to approve lowering the tax for the sector this week, as a study has warned of major revenue losses.
According to this Reuters report, a government study, attached to the agenda of a September 20 GST panel meeting, has said the total annual revenue loss could be as much as Rs 50,000 crore ($6.95 billion), if the panel decided to lower tax rates for the auto sector to 18 per cent from 28 per cent.
Another report by The Economic Times said the government body blamed the current liquidity crisis and troubles of non-bank lenders for the woes of the automobile sector.
Meanwhile, state officials in Kerala, Punjab and West Bengal say they are also opposed to any cut in tax rates in the autos sector, or even consumer goods, because of lacklustre tax collections this fiscal year.
Consequently, the Nifty Auto index dipped nearly 1 per cent on Wednesday as compared to a flat benchmark index Nifty50. Among individual stocks, Hero MotoCorp, Escorts Limited, Tata Motors, and Bosch dipped in the range of 1-2 per cent. Maruti Suzuki India slip 2.3 per cent while Ashok Leyland was down as much as 4.2 per cent on the National Stock Exchange (NSE).
The automobile industry has been facing challenges since past three quarters in terms of additional burden of new insurance policy, constraints on loan disbursement from financial institutions and higher axle load norm impacting commercial vehicle (CV) sales, say experts.

 The sector has pushed for a lowering of tax rates at the September 20 GST panel meeting, in a bid to revive vehicle demand.

DCB Bank hits 52-week high post March quarter earnings

Market News

DCB Bank shares hit a 52-week high of Rs 211, up 4 per cent, on the BSE, in an otherwise weak market on Monday, after the private sector lender reported healthy earnings for the last quarter of fiscal 2018-19 (Q4FY19).

The stock was trading close to its all-time high level of Rs 213 apiece hit on June 16, 2017, on the BSE. In comparison, the benchmark S&P BSE Sensex was down 0.67 per cent at 38,878 points at 10:49 am. The trading volumes on the counter has more than doubled with a total of 6.35 million shares exchanging hands on the BSE and NSE so far.

DCB Bank’s profit after tax rose 50 per cent to Rs 96 crore in Q4FY19, on the back of higher net interest income (NII). The bank’s net profit stood at Rs 64 crore for the same period last year. NII grew 16 per cent at Rs 99 crore against Rs 85 crore in the corresponding quarter of the previous fiscal.

The bank’s asset quality improved sequentially, as gross and net non-performing assets (NPAs) dipped around 1 and 6 per cent QoQ, respectively. Net interest margins (NIMs) were almost flat at 3.8 per cent, though compressed 38 bps YoY. Management is confident of "retaining NIMs at current levels".

"The bank fulfilled its almost prophetic guidance of 1 per cent on return on average assets (RoAA) despite macro challenges like demonetization and GST. While loan growth disappointed in Q4FY19 (16 per cent), stable margins, improving op-lev and asset quality impressed," analysts at HDFC Securities said.


 The brokerage firm, in its results preview, had said that with its core growth engine intact, DCB Bank "has the potential to grow at faster rates."."(We anticipate) upgraded earnings by around 12/16 per cent for FY20/21E. A significant improvement in resulting efficiencies (anticipated) drives up our RoAA estimate to around 1.2 per cent by FY21E," it had said with ‘buy’ rating on the stock and target price of Rs 228 per share...Read More