Share markets in India are trading higher in today's volatile trade. The BSE Sensex is trading up by 255 points, up 0.7%, at 35,150 levels.
Meanwhile, the NSE Nifty is trading up by 79 points.
The BSE Mid Cap index is trading up by 1.2%. The BSE Small-Cap index is trading up by 1%.
On the sectoral front, gains are largely seen in the FMCG sector and automobile sector.
Energy stocks, on the other hand, are witnessing selling pressure.
The rupee is trading at 75.75 against the US$.
Gold prices are trading down by 0.1% at Rs 47,877 per 10 grams.
Note that stock markets around the world have witnessed one of the most volatile phases in 2020 so far. After a sharp correction of 33% from the peak, stock markets witnessed a sharp rebound.
Indian stock markets closed at three-month highs yesterday, extending gains to the third day.
In her latest video, Richa Agarwal, editor of our premium smallcap service Hidden Treasure, shares her thoughts on the implications of the market volatility for the potential returns in the smallcap space.
Tune in to find out more...
In news from the finance sector, Dewan Housing Finance Corporation (DHFL) is among the top buzzing stocks today.
The mortgage lender reported a pre-tax loss of Rs 103 billion in the fourth quarter of March 2020 (Q4FY20), as against a pre-tax loss of Rs 29.1 billion in Q4FY19.
This was on account of a Rs 124-billion net loss on fair value changes. The lender reported a net loss of Rs 76.3 billion in Q4FY20, compared to a net loss of Rs 22.2 billion in Q4FY19.
By opting for a lower tax regime, the mortgage lender netted a sum of Rs 46.1 billion on account of deferred tax for FY20.
It witnessed a serious drop in its loan assets, with housing and other loans at the end of the March quarter at Rs 662 billion, as against Rs 979.8 billion a year ago.
The lender said around 35% of its loan portfolio (by value) had availed of the moratorium facility extended by the Reserve Bank of India (RBI).
The recovery from the moratorium accounts is forthcoming with Unlock 1.0 and commencement of field visits, it said, adding, the recovery will further improve in moratorium accounts during Q1FY21.
Note that in November last year, DHFL became the first financial services company to be admitted into the insolvency process. The mortgage lender had received expressions of interest from 24 entities, some of them wanted to bid for the whole business, while a few others sought to bid for the company in parts.
DHFL share price is presently trading up by 1.7%.
Speaking of non-banking financial companies (NBFCs), note that NBFCs were flush with funds from banks, insurance companies, and asset management companies i.e. mutual funds in 2016.
And with these funds and without the necessary restrictions, NBFCs become reckless in deploying the funds.
You can see this clear as day in the chart below...
One Chart that Predicted the NBFC and Mutual Fund Crisis Back in 2016
Here's what Tanushree Banerjee wrote about this in one of the editions of The 5 Minute WrapUp...
- Let's look back at 2016...
Banks, mutual funds, and insurance companies were competing with each other to lend to NBFCs.
And why not?
Not only were the fast growing NBFCs hungry for funds, they also offered attractive yields.
The NBFCs took more risk than banks by lending without collaterals. But they charged higher interest rates; which meant their margins remained far higher than that of banks.
It's no wonder the NBFCs caught everyone's fancy. In fact, between 2013 and 2016, the top NBFCs saw their valuation multiples move up three to eight times.
As per Tanushree, the problem in the NBFC sector is far from over. But she believes the good quality NBFCs, and housing finance companies will continue to flourish and you can make the most of the opportunity by buying the safest NBFCs.
Moving on to news from the IT sector, shares of Info Edge (India) rose over 6.5% today after the company's board approved raising up to Rs 18.8 billion through issue of equity shares via Qualified Institutions Placement (QIP).
The company will conduct a postal ballot by way of remote e-voting facility for obtaining approval of the members of the company by way of a special resolution.
The company has fixed June 19, 2020 as the cut-off date/record date for the purpose of sending the postal ballot notice by way of e-mails to all the members of the company.
Info Edge also announced its results for Q4FY20 yesterday in which its consolidated income from operations increased 7.8% to Rs 3,275 million.
However, the company posted a 63% decline in its consolidated net profit at Rs 1,190 million for the quarter. In comparison, it had registered a net profit of Rs 3,252 million in the year-ago period.
Info Edge share price is presently trading up by 4.7%.
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