The liquidity crisis at Dewan Housing Finance Corporation Limited (DHFL) has dented the fortunes of ace investor Rakesh Jhunjhunwala, who increased his stake in the troubled company in the March 2019 quarter (Q4FY19).
Together, the top 10 business groups reported a pre-tax loss of Rs 19,342 crore during the January-March 2020 quarter, as against a profit before tax of around Rs 48,500 crore in the year-ago period and Rs 39,600 crore during the December quarter. While Vedanta was the worst hit. others included Aditya Birla, Bharti, Adani, Mahindra, and Tata.
The combined interest payment for India's top listed companies, excluding financial and oil and gas firms, was up 15.2 per cent year-on-year during the six months ended March 2019, outpacing the change in net sales and operating profit.
The Indian rupee is down nearly 2 per cent against the US dollar since the beginning of January 2019. Experts attribute the Indian rupee's relatively poor performance to a sharper-than-expected fall in economic growth in India.
The surge in IT, auto and FMCG stocks were led by investors seeking safety against market volatility.
The country's top FMCG stocks, such as Hindustan Unilever, ITC, Nestl, Britannia, Godrej Consumer Products, and Dabur, among others, are currently trading at around 41x their trailing 12-month earnings, down from their peak P/E multiple of around 48x at the end of December 2018.
The buyback price is at around 28 per cent premium to the current market price of Rs 67 on the Bombay Stock Exchange
These firms owe Rs 13 trillion to lenders and account for 55% of all non-financial corporate debt.
Going ahead, experts say, the fundraising trend in the primary market will depend on how the secondary market performs against the backdrop of the outcome of general elections and global cues.
Since last month, the realty (down 23%), auto (down 16%) and finance (down 14%) indices have underperformed the market by falling over 13%, as against 8% decline in the benchmark indices
While Mcleod Russel, ADF Foods, Indiabulls Real Estate, DCM Shriram and BSE have announced buyback through open market route, the remaining 23 companies plan to buy back their shares via tender offers
Equity investors should thank cash-rich biggies such as TCS, ITC, HUL, Nestl, and Bajaj Auto for this.
While a little more than 140 penny stocks have doubled in value, 555 have given negative returns in the past year. Of these, 84 shed more than half their value.
The underperformance comes amid liquidity concerns in the non-banking finance companies space and Essel Group default news.
The government is expected to dole out some populist policies, especially for the rural / farm sector while presenting the interim budget, given that the country is heading towards general elections over the next few months.
Index heavyweights continue to be top losers with ICICI bank.
There will be pressure on the fiscal situation, especially at a time when the monsoon can also disappoint. More populist expenditure is on cards if the mandate is a hung Parliament or a coalition government.
The risk-reward ratio could turn adverse for foreign investors if corporate earnings disappoint by wide margins, or if crude oil prices spike in the international market, putting pressure on the rupee-dollar exchange rate.
41 companies take back shares worth Rs 27,783 crore in FY17
Analysts attribute this fall to the recent moderation in energy (mainly crude oil) and commodity prices, lowering of input costs for companies in sectors such as FMCG, consumer durables, and automobiles, reports Krishna Kant.
Time opportune, with market buoyancy and entry of new entities
Mukesh Ambani remains the country's wealthiest promoter as his stake in Reliance is now worth Rs 3.25 trillion!
Shares of Motilal Oswal Financial Services, Edelweiss Financial Services and IIFL Holdings have all doubled in the past one year against the Sensex's 23 per cent gain.
Short sellers may capitalise on the weak sentiment owing to the dispute between co-founders Rana Kapoor and Madhu Kapur.
The BSE Midcap index has declined 5.7% thus far in May 2018. In comparison, the S&P BSE Small-cap index has lost 5.6%
The list of companies skipping dividends in FY19 includes some of the country's largest firms and industry leaders such Tata Motors, Avenue Supermart, Future Retail and Vodafone Idea, among others.
Analysts attribute this outperformance to the government's proactive economic reform measures
The Karnataka election is being seen as the semi-final to the 2019 general elections and appears to be heading towards a close fight
Most analysts as well as company executives say the rally in commodity prices is ill-timed coming just when firms were recovering from disruptions such as demonetisation & introduction of GST
Second-tier NBFC stocks are trading at 24.4x their trailing earnings, which is nearly twice their 15-year average of 13.9x
During the current financial year, 25 companies have raised Rs 28,220 crore through IPOs
A weaker rupee could aid corporate earnings through its positive impact on export intensive sectors such as information technology services, pharmaceuticals and commodity producers such as metal and mining, and oil and gas companies.
So far in 2017, the Nifty has gone up by 22.4 per cent.
India's cash-rich promoters are not the same as the wealthiest. For example, Mukesh Ambani is the richest Indian based on his stake in Reliance Industries, followed by Premji, the Adani family of the Adani group, and Radhakishan Damani of Avenue Supermarts.
With India's imports exceeding exports, weak rupee does more harm than good. Analysts, however, say that rupee depriciation is positive for export-oriented sectors such as IT services, pharmaceuticals, textiles and automobiles
Though most experts remain bullish on the banking space, they suggest investors buy only those banks whose NPAs are at a manageable level of 3% to 4% and there is credit growth or earnings visibility.
In its investor presentation, IHH said it wanted to develop Fortis into a market leader.
The Hinduja Group, Mukesh Ambani, Murugappa, and the Adani groups were the other gainers in the Modi regime, while Naveen Jindal and Sun Pharma groups saw the most erosion in their m-cap in the last five years, reports Krishna Kant.
Institutional investors led by foreign portfolio investors have bought these shares.
The finance ministry has short listed 11 PSUs for a possible buyback of shares in the ongoing financial year
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