September 26, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

Sensex Ends 127 Points Lower; Reliance Industries & ICICI Bank Among Top Nifty Losers

Mon, 13 Sep Closing

Indian share markets witnessed negative trading activity throughout the day today and ended marginally lower.

Benchmark indices started the week on a choppy note as the Sensex gyrated 370 points in intra-day trade tracking mixed cues from Asian peers.

At the closing bell, the BSE Sensex stood lower by 127 points (down 0.2%).

Meanwhile, the NSE Nifty closed lower by 14 points (down 0.1%).

Coal India and Hindalco Industries were among the top gainers today.

Reliance Industries and ICICI Bank, on the other hand, were among the top losers today.

The SGX Nifty was trading at 17,364, down by 8 points, at the time of writing.

The BSE MidCap index and the BSE SmallCap index ended up by 0.3% and 0.8%, respectively.

Sectoral indices ended on a mixed note with stocks in the energy sector and banking sector witnessing most of the selling pressure.

Metal and realty stocks, on the other hand, witnessed buying interest.

Shares of Abbott India and Shriram City Union hit their respective 52-week highs today.

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Asian stock markets ended on a mixed note today.

The Hang Seng ended down by 1.5%, while the Shanghai Composite ended the day up by 0.3%. The Nikkei ended up by 0.2% in today’s session.

US stock futures are trading on a positive note today with the Dow Futures trading up by 170 points.

The rupee is trading at 73.67 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.1% at Rs 46,864 per 10 grams.

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In news from the engineering sector, Varroc Engineering was among the top buzzing stocks today.

Shares of Varroc Engineering hit a 52-week low of Rs 263.5, down 3.6% on the BSE in the intra-day trade today, on growth concerns.

The stock of the auto parts and equipment company has fallen below its previous low of Rs 270.4, touched on 7 September 2021.

Revenue from operations for the quarter declined by 19% quarter on quarter (QoQ) to Rs 29.1 bn; India Business revenue declined due to Covid second wave related lockdowns and the VLS revenue declined as a result of key customer original equipment manufacturer (OEMs) shutting plants or reducing volumes due to semiconductor shortages.

The consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter was severely impacted by the lower revenue/ capacity under-utilization as well as increase in raw material costs.

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The company’s net debt increased to Rs 27.7 bn mainly as a result of disruption to working capital cycle, capex and weaker operating performance.

According to company’s management, the countrywide lockdowns in India during Covid second wave and severe semiconductor shortages globally, impacted the revenue and the profitability in the first quarter.

In a statement the company said,

  • The semiconductor shortage situation is expected to continue in quarter two as well. The additional capacity for semiconductors is expected to be available in the second half and this should help stabilise the industry passenger vehicle (PV) volumes.

The group designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle OEMs directly worldwide.

Varroc Engineering share price ended the day down by 3.6% on the BSE.

Moving on to news from the finance sector…

SREI’s Rs 350 bn Loan

Banks may classify Rs 350 bn loan given to SREI group as non performing asset (NPA) by the end of this quarter ending in September after the national company law tribunal (NCLT) set aside the previous order restraining banks from such classification.

On 7 September, the national company law appellate tribunal (NCLAT) set aside a 30 December 2020 order issued by the Kolkata bench of the NCLT which said that any non-payment of dues by SREI Infrastructure Finance and SREI Equipment Finance will not be recognised as an event of default, till a scheme of arrangement is signed by all creditors, which included its lenders as well as bond holders.

While many banks have already downgraded loans to SREI Equipment Finance and SREI Infrastructure Finance as stressed loans in the last quarter, accelerated provisioning will be made in the current quarter.

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Public sector banks Indian Bank and Canara Bank have exposures of Rs 20 bn and Rs 12 bn, respectively, to Kolkata-based SREI group, while private sector banks ICICI Bank and Axis Bank have Rs 8 bn each.

Since 2019, the company has been pursuing a merger of its two group companies, SREI Infrastructure and SREI Equipment Finance.

In December 2020, the NCLT granted relief to SREI by directing banks and financial institutions to not take any coercive action against the company after it had approached the NCLT bench requesting moratorium on coupon payments and postponement of redemption dates until the merger is complete.

However, UCO bank along with the Reserve Bank of India appealed against the order in NCLAT.

SREI Infrastructure Finance share price ended the day down by 4.2% on the BSE.

Speaking of the current stock market scenario, note that the BSE smallcap index has surged around 180% since the crash in March 2020.

Despite the index being up more than 1.8 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2021 and beyond.

Here’s why…

The Smallcap to Sensex ratio, a metric referred to get a sense of relative valuations, currently stands at 0.48 times. To be sure, this is higher than a median of 0.43 times.

And yet, it’s the lowest of all the peaks in the smallcaps so far. In the last cycle which peaked in January 2018, when the ratio touched 0.49, the peak was still 9 months away.

Here’s what Richa wrote in a recent edition of Profit Hunter

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