Indian share markets finished the trading week on a flat note after hitting record highs earlier during the day. At the closing bell, the BSE Sensex closed higher by 10 points and the NSE Nifty finished down by 21 points. The S&P BSE Mid Cap finished up by 0.3% while S&P BSE Small Cap finished up by 0.2%. Gains were largely seen in pharma stocks and automobile stocks. PSU stocks, energy stocks and bank stocks witnessed majority of the selling pressure.
Yes, Bank share price fell 7.4% after the bank reported a sharp rise in bad loans following the Reserve Bank of India's supervisory assessment. The central bank's assessment of Yes Bank's gross bad loans was Rs 63.55 billion more than what the lender had reported at the end of March.
Including divergence impact, gross bad loans rose to Rs 27.20 billion as the end of September, up from Rs 9.16 billion a year ago and Rs 13.64 billion a quarter ago. As a percentage of total loans, gross NPAs were at 1.82% as the end of September compared to 0.97% three months earlier.
PSB stocks plunged in today's trade. PNB share price fell 8%, IDBI Bank share price slumped 7.9% and SBI share price closed 3% in red.
The Government recently unveiled the Rs 2.11 trillion public sector bank (PSB) capitalization plan. This will be carried out over the next two years with maximum allocation in the current year. And implemented through the budgetary provisions of Rs 181.39 billion, recapitalization bonds to the tune of Rs 1.35 trillion.
Recapitalisation of PSBs Over the Years
PSBs are burdened by bad loans that have doubled in the past five years. This has led to a slowdown in the loan growth segment. Due to this, PSBs lost their market share from 70.9% in FY16 to 64% in FY17.
Asian stock markets finished broadly higher today with shares in Japan leading the region. The Nikkei 225 is up 1.24% while Hong Kong's Hang Seng is up 0.84% and China's Shanghai Composite is up 0.27%. European markets are higher today with shares in France leading the region. The CAC 40 is up 0.95% while Germany's DAX is up 0.77% and London's FTSE 100 is up 0.23%.
Rupee was trading at Rs 65.01 against the US$ in the afternoon session. Oil prices were trading at US$ 52.52 at the time of writing.
Telecom stocks plunged in today's trade with Bharti Infratel share price and Bharti Airtel share price leading the losses.
As per a leading financial daily, telecom secretary Aruna Sundararajan has said that the government is making efforts to double India's telecom infrastructure by the year 2020.
She called upon all stakeholders in the country both central and state governments, local authorities and the industry to facilitate laying out of optical fibre in the country for delivering high-speed broadband services.
Sundararajan has said that in the next 2-3 years, they expect to see many more initiatives to come because government itself is working on portfolio of Rs 1 trillion including phase 1 of Bharat Net. Adding further, she pointed out that the government is pushing ahead with Bharat Net project rollout to connect the country's 2.5 lakh gram panchayats with optical fibre cable (OFC) for high-speed internet access by March 2019.
Telecom secretary further observed that there were a lot of anomalies in policies at various levels that would need to be aligned for the speedy rollout of the digital infrastructure. She cited a report saying every 1.3% increase in broadband penetration leads to 1% increase in GDP, but in the case of India, it has resulted in 3.3% increase in GDP.
Moving on to news from automobile sector. TVS Motor Company has entered in an exclusive partnership with Motoplex S.A.S of Grupo Bonanza, a leading automobile business house in the Dominican Republic. This partnership is in line with the company's plan to expand and strengthen its presence in the Caribbean region.
As per this partnership, Motoplex S.A.S will develop and operate 40 TVS Motor Company dealerships in Dominican Republic. Motoplex S.A.S currently operates through a network of more than 80 touch points in the region.
TVS Motor share price finished the day up by 0.1%
Meanwhile, Maruti Suzuki India Ltd posted more than a 3% rise in its quarterly profit, beating analysts' estimates. The company reported a profit of Rs 24.84 billion (US$381.86 million) for the second quarter of FY18, versus Rs 24.02 billion a year ago.
Maruti Suzuki share price finished up by 0.5% on the BSE.
In news from pharma sector, Cipla share price finished the trading day up by 1.8% after the company's subsidiary, InvaGen Pharmaceuticals Inc., received final approval for its Abbreviated New Drug Application for Sevelamer Carbonate Tablets, 800 mg, from the United States Food and Drug Administration (USFDA) to market a generic version of Genzyme's Renvela Tablets, 800 mg.
Reportedly, Renvela Tablets had US sales of approximately US$1.85 billion for the 12-month period ending August 2017.
In another development, Biocon share price plunged 2.2% after the company reported 53.10% fall in its net profit at Rs 688 million for the quarter ended September 30, 2017, as compared to Rs 1.46 billion for the corresponding quarter in the FY17.
However, total income of the company increased by 2.71% at Rs 10.19 billion for quarter under review as compared to Rs 9.92 billon for the same quarter in the previous year.
Pharma stocks finished the day on a strong note with Sun Pharma share price and Wockhardt Ltd share price leading the gains.
And here's a note from Profit Hunter:
This week, the Nifty 50 Index traded on a strong note. Monday saw it open the session with 30 points gap up that continued to trade higher. On Wednesday, the index gapped up 113 points to hit a new lifetime high when the government announced the recapitalization package for PSU banks. The steady momentum continued as the index touched new life highs. On Friday, the index witnessed minor profit booking, but ended its weekly session 1.70% up.
Last time, we observed a negative divergence between Nifty index and Bank Nifty index. This week, the government's recapitalization plan pushed the Bank Nifty higher. Unfortunately, the index failed to make a new life high. On the flip side, the Nifty index kept hitting new life-highs during the week.
This indicates that the divergence is still intact.
So, is the red flag still waving at the top?
Let's wait and see how the things pan out next week.
Divergence Between Nifty and Bank Nifty Intact
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