Share Market Highlights: Sensex falls 289 points, Nifty at 11,080; Yes Bank loses 9.5%

The Indian equity benchmark indices continued their downtrend despite stable global cues. The Nifty index opened on a firm note, however, the gains soon fizzled out as the index slipped to a low of 11,073 before closing 0.9% lower at 11,085 (down 104 points). Notably, Bank Nifty lost around 500 points and closed lower at 28,790 levels. The broader market indices ‘BSE Midcap and BSE Smallcap’ too ended lower by 1.6% and 2.1%, respectively. Once again IT ended in positive (up 0.7%), while all other sectoral indices witnessed heavy selling pressure with Auto, Metals, Oil & Gas and Banking leading the pack of losers.

Going forward, we expect that weak domestic sentiments may have a negative bearing on the Indian markets. The corporate earnings have also been mixed so far and leading corporates have provided muted outlook for the coming quarters. On the global front, Fed meet which is scheduled on 30-31 July may have a meaningful impact on the markets as there are high expectations for a rate cut. Moreover, any positive outcome from the negotiations between US-China for trade tariffs could also provide direction to the markets, said Ajit Mishra Vice President, Research, Religare Broking Ltd.

Govt appoints disinvest secretary Atanu Chakraborty as a director on RBI central board.

Tech Mahindra Q1FY20 net profit stands at Rs 959 crore. Its revenue stands at 8,653 crore and EBIT at 992 crore for Apr-Jun. 

Axis Bank posts its Q1 net interest margin at 3.40% Vs 3.44% (QoQ) and loan growth at 13% (YoY). Its Q1 net profit stands at Rs 1,370 cr. 

After drawing ire from the likes of Warren Buffett, Facebook’s latest ambition in its cryptocurrency Libra may have hit a roadblock as the social media company itself warned investors that many factors could hinder the rollout of the digital currency. 

Read more: Facebook’s Libra may not see light of day; Mark Zuckerberg firm cites no cryptocurrency experience

Shares of billionaire Sunil Mittal-run Bharti Airtel gained on Tuesday morning, after global firm Bank of America Merrill Lynch (BofAML) upgraded the stock to buy while also increasing the target stock price. 

Read more: Bharti Airtel biggest gainer on Sensex, share price jumps 4% after BofAML upgrade

The company will issue an offer to all Debenture holder(s) for pre-mature redemption of the NCDs held by them at par. The process of offer and buyback / pre-mature redemption of these NCDs will be completed by 14th August 2019. 

Details of the NCDs are as below:
ISIN Amount Outstanding (Rs. Crs.)
INE148I07FY8 26.71
INE148I07FZ5 562.92
INE148I07GA6 65.32
INE148I07GD0 5.60
Total 659.55

The government is targeting to help 3-5 lakh women Self Help Groups (SHG) in order to give a push to entrepreneurship among rural women. The Ministry of Rural Development aims to elevate women SHGs’ nano enterprises to micro enterprises, The Indian Express reported. 

Read more: Becoming micro, small enterprise from nano: Govt to help lakhs of women to boost entrepreneurship

Petrol price in India has more of tax, duty and commission built in it, than the cost of crude and refining. If tax, duty and commission are removed from the retail price of petrol and diesel, petrol can be available at just Rs 33.94 per litre and diesel can be sold at Rs 38.48 per litre in the fuel pumps of India — less than half their prevailing retail prices. However, these are just the dealer price but the retail price has a long list of additions. “Public sector oil marketing companies take appropriate decision on pricing of petrol and diesel in line with international product prices and other market conditions,” Anurag Thakur, MoS, Ministry of Finance, said in a reply to a query in Lok Sabha.

Read more: More than half of what you pay for petrol is tax, duty and commission; here’s the breakup

The Indian-headline indices Sensex and Nifty fell heavily in the last part of the trading session. While the Sensex lost 300 points, Nifty was seen trading at a level of 11,095, down 94 points from the last session. 

Shares of United Bank of India surged Tuesday after it posted Q1Fy20 results on Tuesday. It reported profit after tax of Rs 104.99 crore against 95.14 crore in the previous quarter 

Even as GST roll out completed two years, no system validated input tax credit (ITC) through invoice matching has been put in place, a CAG report on GST said. In addition, non-intrusive e-tax system still remains elusive, said the report tabled in Parliament on Tuesday. The GST was launched on July 1, 2017, and has completed two years since then. The indirect tax was introduced as the biggest tax reform and showcased as ‘One Nation One Tax.’ Adding, the report said that the system has become prone to ITC frauds, owing to the complex nature of the return mechanism and the technical glitches leading to a roll back of invoice-matching. 

Read more: GST under CAG lens: National auditor lists concerns; says full potential not achieved even after 2 years

Shares of Coffee Day Enterprises, which runs the Cafe Coffee Day outlets, plunged to a record low on Tuesday morning, after founder VG Siddhartha went missing and a letter written by him admitting wrong business decisions came to light. Coffee Day Enterprises shares plunged 20% to hit the lower circuit at Rs 154.05 on BSE. According to experts, there is still uncertainty and investors must wait for management commentary to gain more clarity. However, those holding the shares would be better off exiting the stock.

Read more: Cafe Coffee Day shares plunge to record low after VG Siddhartha goes missing; should you buy or sell stock?

Google CEO Sundar Pichai’s job was on offer recently on Linkedin, evoking surprise from millions of users of the popular professional networking platform. Millions of people applied for the position, even as some termed it as a ‘dream job’. However, it soon turned out that the job posting advertising applications for was actually fake. The vacancy was posted by Michel Rijnders, an online recruiter from the Netherlands, who later accepted that it was actually a security bug that lets users post an official-looking job opening on any company’s official LinkedIn page

Read more: https://www.financialexpress.com/industry/google-ceo-sundar-pichais-job-was-on-offer-on-linkedin-but-no-application-was-selected-heres-why/1660398/

With its expanded capacities supporting volume growth, its market-share gains in existing products and with softening raw-material prices, Aarti Drugs, we believe, is on an earnings growth trajectory. We expect its revenue/PAT to clock 14.5%/32% CAGRs over FY19-21. We maintain our Buy rating, with a target of `796, Anand Rathi Shares & Stock Brokers said in a note. 

Our analysis suggests there would be no changes to the NIFTY 50 index at the upcoming index review in Aug’19. Despite the recent sharp correction in the
lowest-ranked NIFTY 50 stocks by free-float market cap (FF MCap) – Yes Bank and IHFL – their average FF MCap over the past six months remain high, thereby
raising the criteria for the top contenders (GCPL and Shree Cement) from the NIFTY Next 50 index. In general, we observed significant underperformance (-11% CY-TD) of the NIFTY Next 50 index as compared to NIFTY 50, said ICICI Securities in a report.

Aegis Logistics' Apr-Jun net profit grew 10.3% at Rs 56.9 crore as compared with Rs 51.6 crore in the same quarter of last year, while its revenue was up 92.3% at Rs 1,955 crore against Rs 1,017 crore, year-on-year basis.

We expect ESC’s tractor volume to fall by 8%/6% YoY in FY20E/FY21E. We reduce our construction equipment volume estimate by 17%/19% for FY20E/FY21E, respectively. We lower our revenue and EBIDTA estimates by 12%/11% and 19%/19% for FY20E/FY21E, respectively. Accordingly, we cut our EPS estimates by 18%/21% for FY20E/FY21E. In view of expected cyclical down-turn and declining return ratio, we would assign down-cycle P/E multiple to Escorts, hence we lower our target P/E valuation multiple from 11.5x to 10.5x 1-Year forward. Moreover, poor visibility on tractor industry’s volume over the next 2-3 quarters strengthens the case for valuation downgrade. Hence, we reiterate our REDUCE recommendation on the stock with a revised Target Price of Rs 435 (from Rs 600 earlier), valuing it at 10.5x FY21E EPS, Reliance Securities said in a report. 

The Indian headline indices - Sensex and Nifty turn green gain during Monday intraday trading. While the Sensex is trading at 37,740 level, 54 points higher than the previous close, Nifty50 is at 11,193.85, up 0.04 points from the lat settlement. 

Shares of Coffee Day Enterprises Ltd slumped 20 per cent on Tuesday after reports that its Chairman and Managing Director V G Siddhartha has gone missing. The shares plummeted 20 per cent and hit its 52-week low of Rs 154.05 on the BSE. On NSE, shares declined 20 per cent and fell to its 52-week low of Rs 153.40. 

Also read: CCD’s missing founder VG Siddhartha’s shocking letter reveals business failure, withholding info

With traction in India formulations and revamped portfolio of US generics along with visibility of launches of key products will bring qualitative improvement in earnings estimates. Price erosion in the US due to channel consolidation has been gradually stable for its portfolio of generics. The better visibility of launching
Nuvaring and Copaxone in CY19E-20E will make its risk-return ratio favourable. We assign PE 18x on FY21E earnings and derive new TP of Rs2,997, improved by 17% over our previous TP of Rs2,558. We upgrade our recommendation to ‘Accumulate’, Prabhudas Lilladher said on Dr Reddy's shares.

Investec Securities has recommended a 'BUY' on Mahindra & Mahindra Financial Services. Check in detail:

MMFS’s stock dropped 18% last week and it now trades at a decadal low valuation. Q1 earnings were below expectations, but share price movement seems to suggest the Q1 earnings impairment is permanent. In this note, we highlight that impairment is temporary and earnings should catch up by Q4. Growth and asset quality trends are in-line, and MMFS has built capacity in collections which should benefit asset quality as we saw in FY19. MMFS is gaining m/s and not facing any funding challenges. The subsidiary performance was weak but this looks temporary. We cut our earnings estimates and TP to Rs425 primarily due to higher opex. MMFS is still a 15% RoE & growth NBFC. BUY.

"We already had a SELL recommendation as we believe the source of funds matrix change makes disbursal rates unsustainable and will lead to fall in loan growth along with market share loss," said Sameer Kalra, Founder and Research Head at Target Investing

Shares of Indiabulls Housing Finance recovered in the early trade on Tuesday after sliding 3 per cent. The housing finance company's shares tumbled heavily  on Monday after Subramanian Swamy wrote a letter to Prime Minister Narendra Modi accusing the company of embezzlement of Rs 1 lakh crore from National Housing Bank. However, the housing finance company has denied the allegations made by Swamy and said it doesn’t owe anything to NHB.

Oil extended gains on speculation that demand will get a boost from a potential rate cut by the Federal Reserve, while investors await news from the resumption of U.S.-China trade talks. Futures advanced as much as 0.7% in New York after climbing the most in almost three weeks on Monday. Later this week, the Fed is expected to lower borrowing costs for the first time in more than a decade. Chinese and American negotiators gather for two days of talks Tuesday, while U.S. government data on Wednesday is forecast to show crude stockpiles fell for a seventh week.

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State-run electricity distribution companies (discoms) reported a near doubling of their financial losses in FY19, in what reflected a dramatic reversal of the trend of a secular decline in losses in FY17 and FY18 thanks to the UDAY scheme. What caused these entities to digress from the pathway to progress are politically-motivated delays and inadequacies in tariff hikes and state government departments’ failure to pay them in time for the electricity purchased. Another reason for the rise in losses is the Saubhagya scheme for electrification of households. Discoms’ financial losses stood at Rs 28,369 crore at the end of FY19, up 88.6% year-on-year, according to the updated data provided to the power ministry.

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The commerce ministry has circulated a Cabinet note to phase out the flagship Merchandise Exports from India Scheme (MEIS) and move to a more WTO-compatible regime, as countries like the US have challenged India’s export “subsidy” programmes, a source told FE. As reported by FE, the new scheme will refund both state and central levies on inputs consumed in exports and various sectors will be covered in phases.

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Liquor baron Vijay Mallya-linked United Breweries Holdings (UBHL) on Monday moved the Supreme Court against a Karnataka high court’s order that allowed the debt recovery officer to sell its 2.8% shareholding, worth Rs 1,025 crore, in beer manufacturer United Breweries (UBL) through private sale in a piecemeal manner. It said that this piecemeal sale was allowed to proceed despite the owners of properties having filed an application on June 22 making an offer to the HC to sell liquid assets (principally the 26.8% shareholding of UBHL in UBL) to discharge the liabilities of various creditors of the defunct Kingfisher Airlines at a time when the value of assets aggregated to over Rs 13,960 crore (over Rs 14,910 crore as on March 31, 2019).

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The correction in the NSE mid-cap index seems far from over, even though the trailing price to earnings (P/E) multiple has fallen from the peak of 48 to 28 now, strategists at Credit Suisse wrote on Monday. They pointed out the P/E multiple is still significantly higher than the 10-25 range seen in the years 2005-15. The NSE mid-cap index is down 10% in calendar 2019 so far and down a good 26% from all-time highs, which it had hit in January 2018. Having breached the October 2018 lows, the index is now at the levels seen in February 2017.

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The amount related to fake vehicle insurance has more than doubled in just one year. Fake motor policies worth Rs 53.6 crore were issued in 2018-19, Anurag Thakur, MoS, Ministry of Finance, said in a reply to a question in Rajya Sabha last week. The amount related to fake motor policies was at Rs 25.7 crore in the previous year. The minister further informed that the Insurance Regulatory and Development Authority of India (IRDAI) has directly received complaints about the issuance of fake policies by three companies which are not registered as general insurers.

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State Bank of India (SBI) has tightened lending terms dramatically for auto dealerships, according to a source and an internal memo seen by Reuters, seeking to reduce its exposure to risk from a sector in the midst of a sharp downturn. The shadow banking crisis that began to unfold in India during mid-2018 has deepened this year. The liquidity crunch in non-bank financing, higher insurance costs and rises in taxation have served to increase the pressure on the car sector, with monthly auto sales falling by 17-20% since April. Monthly passenger vehicle sales in June fell by the biggest margin in 18 years.

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The RBI might not provide any relief to people from pesky telecallers from Non Banking Financial Companies (NBFCs) offering loans as it said they create “awareness” about their products and banning them may not be the “ideal way out”, according to an RTI response. In a note sheet made public under the RTI, the Reserve Bank of India (RBI) said the “onus should be on the borrower” to exercise “due diligence” and understand the terms and conditions before availing loans offered through such calls. 

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