Share markets in India are presently trading on a negative note. Barring consumer durables sector and FMCG sector all sectoral indices are trading in red with stocks in the oil & gas sector, banking sector and capital goods sector witnessing maximum selling pressure.
The BSE Sensex is trading down by 204 points (down 0.5%), while the NSE Nifty is trading down by 79 points (down 0.7%). The BSE Mid Cap index is trading down by 0.6%, while the BSE Small Cap index is trading down by 0.5%.
The rupee is currently trading at Rs 69.31 against the US$.
The Reserve Bank of India (RBI) has cut repo rate by 25 basis points to 5.75%. The central bank also changed its stance from 'neutral' to 'accommodative'. The reverse repo rate has also been altered to 5.50%.
In the news from the finance sector, DHFL share price is witnessing selling pressure today after many rating agencies downgraded the commercial papers (CP) issued by the debt-laden company to default.
As per an article in The Economic Times, rating agencies Crisil, CARE and ICRA have downgraded commercial papers (CP) issued by DHFL to default or 'D' category after the company missed an interest payment on its non-convertible debentures (NCDs) on Tuesday.
Here's an excerpt from the article:
- The company missed its interest payment deadline on a set of outstanding bonds, but the embattled company is in talks with financiers to help meet its Rs 1,000-crore-plus obligation within the seven-day grace period and prevent a default.
Shares of the company fell around 15% to Rs 95, hitting five-year lows on back of the above news.
In response, DHFL said that the action by the rating agencies was "extremely surprising as the company has been making & continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations.
Since September 2018, the company has repaid close to Rs 400 billion of obligations and also sold its strategic retail assets including Aadhar, Avanse and DHFL Pramerica asset managers.
Meanwhile, reports also state that the company will meet State bank of India (SBI) led consortium today, for a solution and might opt for selling part of the portfolio to the banks for 15 billion.
Note that DHFL is also facing questions about its financial health after the IL&FS default pushed up the cost of funds for the mortgage lender and made borrowing difficult.
Speaking of non-banking financial companies (NBFCs), it is evident from the chart below that their credit growth has seen robust growth in recent years.
Is the NBFC Party in India Coming to an End?
From 2013-2017, NBFCs grew by 13% as compared to 5.4% for banks. A major reason for this is the gain in market share from public sector banks (PSBs). The recent NPA woes of the PSBs has seen them tighten up their credit lines.
The NBFCs have stepped in, along with private sector banks, to fill this gap. But the recent liquidity crisis at IL&FS has raised concerns over how long this growth will continue.
It would be interesting to see how this all pans out. Meanwhile, we will keep you updated on the latest developments from this space.
Moving on to the news from the IT sector, Wipro has signed a definitive agreement to acquire International TechneGroup Incorporated (ITI), a global digital engineering and manufacturing solutions company.
Founded in 1983, the company is headquartered in Milford, Ohio, and has offices in UK, ltaly, Israel and Germany. The firm's last three years' revenue stood at US$ 23.2 million, US$ 22.2 million and US$ 19.6 million, respectively.
Reportedly, ITI's offerings and solutions will be consolidated as a part of Wipro's industrial & engineering services business and will function as a wholly-owned US subsidiary of the company.
Wipro's industrial & engineering services provides customers with a platform to innovate and engineer the next generation of products and platforms at scale, using an approach termed as 'Engineering NXT'.
Earlier this week, Wipro had fixed 21 June 2019 as the record date for the proposed buyback of shares.
Ankit Shah has shared the detailed note of the buyback. You can read it here.
Wipro share price is presently trading down by 0.2%.
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