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Sensex ends 536 points lower, Nifty below 11,000-mark

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Sensex down

Mumbai, Sep 24: Slump in the financial stocks along with a weak rupee and high crude oil prices dragged the S&P BSE Sensex down 536 points on Monday and the NSE Nifty50 lost nearly 170 points to close below 11,000-mark — slipping into the red for the fifth consecutive session.

On the other hand, the rupee weakened during the day to trade around 72.59 (4.15 p.m) per US dollar against the previous close of 72.20 per greenback.

With all the major sectors contributing to the sell-off, top sectoral losers were banking, auto and finance.

At 3.30 p.m, the wider NSE Nifty50 provisionally closed at 10,974.90 points, lower 168.20 points or 1.51 per cent from the previous close of 11,143.10 points.

The BSE Sensex, which had opened at 36,924.72 points, provisionally closed at 36,305.02 points, lower 536.58 points or 1.46 per cent from the Friday’s close of 36,841.60 points.

The Sensex touched an intra-day high of 36,945.50 points and a low of 36,216.95 points.

IANS

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Market Watch – Markets not yet out of the woods

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Sensex Stock Market Update UP and Low

Markets behaved on expected lines and fell on the first four trading days with a sell-off on expiry day. They recovered on Friday the first day of the new futures series which is of five weeks duration. BSESENSEX lost 1,457.16 points or 3.75 per cent to close at 37,388.66 points while NIFTY lost 454.70 points or 3.95 per cent to close at 11,050.25 points. The broader markets saw BSE100, BSE200 and BSE 500 lose 3.98 per cent, 4.14 per cent and 4.24 per cent respectively. BSEMIDCAP lost 4.73 per cent while BSESMALLCAP lost 5.26 per cent. There was panic across the board on Thursday and it was selling by FII’s and liquidation by momentum traders which led to the mayhem. The recovery on Friday was equally sharp and about a third of the losses of four days have been recovered.

The Indian Rupee lost 17 paisa or 0.23 per cent to close at Rs 73.61 to the US Dollar. After a volatile week, Dow Jones closed with losses of 520.46 points or 1.88 per cent at 27,657.42 points.

September series expired with losses of 753.70 points, or 6.52 per cent at 10,805.55 points. This was the lowest closing of NIFTY during the month. On an intra-day basis, the NIFTY on expiry day had touched a low of 10,790.20 points while the low on the BSESENSEX was 36,495.98 points.

The week gone by was about the primary market with three issues opening and closing for subscription and one new listing. Shares of Route Mobile made their debut on Monday and closed at Rs 651.10, a gain of Rs 301.10 or 86.03 per cent. Shares were issued at Rs 350. The striking feature of the day’s trading was the delivery percentage of 97.74 per cent of the non-anchor portion. This effectively means that almost everybody who got allotment of shares, sold on day one. 25 per cent of these shares were bought by two institutional investors and this saw the share gaining further ground to close at Rs 938.60, a gain of Rs 168.17 per cent.

Computer Age Management Services Limited which had tapped the capital markets with its offer for sale saw subscription of 46.99 times. The QIB portion was subscribed 73.18 times, HNI portion subscribed 111.85 times and Retail portion subscribed 46.99 times. The price band was Rs 1229-1230. Shares would list on 1st of October.

The second issue was from Chemcon Speciality Chemicals Limited and shares were issued in a price band of Rs 338-340. The issue was subscribed 149.33 times overall. QIB portion was subscribed 113.54 times, HNI portion 449.14 times while Retail portion was subscribed 41.21 times. This issue would list on Thursday the 1st of October.

The third issue was from Angel Broking Limited and was subscribed 3.94 times overall. Shares were issued in a price band of Rs 305-306. QIB portion was subscribed 5.74 times, HNI portion undersubscribed at 0.69 times and Retail portion subscribed 4.31 times. This issue would list on Monday 5th October.

There are three issues opening next week on Tuesday the 29th of September and closing on Thursday the 1st of October. The first issue is from Mazagon Dock Shipbuilders Limited which is issuing shares in a price band of Rs 135-145. The issue is an offer for sale from the government of India for 3,05,99,017 equity shares. Being a government offer, there would be no anchor allocation. The EPS for the period ended March 2020 was Rs 21.36 and the PE multiple is 6.32 to 6.79. Mazagon Dock is into warships and submarine building and is the only shipyard in India with submarine making capability. There are two other defence PSU listed shipyard companies namely, Garden Reach Shipbuilders and Cochin Shipyard. The issue is very attractively priced and offers ample scope for appreciation. However, allotment would be only by lottery.

The second issue is from UTI Asset Management Company Limited which is through an offer for sale of 3,89,87,081 shares by NSE. The price band is Rs 552.-554. The company had earned an EPS of Rs 21.53 for the year ended March 2020. The PE multiple based on March 2020 numbers is 25.64-25.73. The net asset value or NAV is Rs 212.88 as on 31st March 2020. There are two listed peers for the company, HDFC AMC and Nippon Life India Asset Management Limited. Compared to the peers, the issue is reasonably priced.

The third issue is from Likhitha Infrastructure Limited which is raising capital through a fresh issue of 51 lac shares in a price band of Rs 117-120. The EPS for the year ended March 2020 was Rs 13.59. The PE based on March 2020 is 8.61-8.83. The company is into the business of laying city gas distribution pipes and also product pipeline on a cross country basis. The company has an order book of over Rs 662 crore as of July 2020 and this would be executed over the next 24-30 months. Revenue for the year ended March 2020 was Rs 162 crore. The company gets pipes as a free item for installation from the customer, hence the revenue looks lower than the word ‘infrastructure player’ suggests. Looks an interesting company but the size of the issue and the simultaneous issues from three companies could act as a drag.

Covid-19 saw the world have 330,58,750 patients, 998,747 deaths and 244,11,772 patients recover. In India we had 59,92,532 patients, 94,534 deaths and 49,41,627 people recovering. Compared to the previous week, the world saw 20,65,770 new patients, 37,272 deaths and 18,23,867 patients recovering. In India we saw 5,91,913 new patients, 7,760 deaths and 6,38,58. This is the first time that the number of patients recovering is higher than new patients. This is the first time that the number of patients recovering is higher than new patients.

Coming to the markets, we saw the anticipated correction pan out and the price damage that it led to. We are not yet out of the woods and it would be fair to assume that after a continuation of the current one-day old rally which could last for a further day or two, expect the correction downwards to continue. While lows made on Thursday of 36,495 on BSESENSEX and 10,790 on NIFTY would act as immediate supports, the breaking of these levels could bring a sharper and swifter correction. Use rallies to sell and sharp dips to buy. Refrain from having overnight positions. The week has a trading holiday on Friday and that would bring a sharp reduction in positions on Thursday closing as we have a three-day holiday thereafter. The two new listings on Thursday would keep markets buoyant and engrossed on the last day of the week. Trade cautiously.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

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Finance Ministry to provide capital support from Rs 20k cr fund to some PSBs in Q3

The fund infusion would be for meeting regulatory capital requirements if the need arises in October-December quarter, sources said

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The Finance Ministry is likely to provide capital support from the Rs 20,000 crore fund approved by Parliament in recently concluded session to some Public Sector Banks (PSBs) in the third quarter itself.

Parliament approved Rs 20,000 crore for PSB capital infusion as part of the first batch of Supplementary Demands for Grants for 2020-21 which sought additional spending of a record Rs 2.35 trillion primarily to meet expenses for combating the Covid-19 pandemic.

The fund infusion would be for meeting regulatory capital requirements if the need arises in October-December quarter, sources said.

The second quarter result will give an idea as to which bank may require regulatory capital and accordingly recapitalisation bonds would be issued to them, sources said.

Besides, state-owned banks already have shareholders’ approval for raising capital through a mix of equity and bonds during the current fiscal.

It is to be noted that the government refrained from committing any capital in the Budget 2020-21 for PSBs, hoping that lenders will raise funds from the market depending on the requirement.

In 2019-20, the government infused Rs 70,000 crore into PSBs to boost credit for a strong impetus to the economy.

In the last financial year, Punjab National Bank got Rs 16,091 crore, Union Bank of India received Rs 11,768 crore while Canara Bank and Indian Bank got Rs 6,571 crore and Rs 2,534 crore, respectively.

Allahabad Bank received Rs 2,153 crore, United Bank of India got Rs 1,666 crore and Andhra Bank received Rs 200 crore. These three lenders have been merged with various PSBs.

Besides, Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank received Rs 4,360 crore and UCO Bank got Rs 2,142 crore. Punjab & Sind Bank received Rs 787 crore and Central Bank of India got Rs 3,353 crore.

In addition, LIC-controlled IDBI Bank received additional capital of Rs 4,557 crore.

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RBI’s role in Dhanlaxmi Bank Board should be reviewed: AIBEA

Earlier the bank closed down many of its branches in north Indian States owing to inadequate controls which landed the bank into problems.

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Dhanlaxmi Bank

Chennai, Sep 27 : The role of Reserve Bank of India (RBI) in the Board of Directors of Dhanlaxmi Bank (originally Dhanalakshmi Bank) should be reviewed, said a top official of the largest union in the banking sector.

Stating that the small private sector bank Dhanlaxmi Bank which had turned around is back to old ways C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA) said: “We strongly believe that RBI’s role in the Board of Directors of the Bank should be reviewed as otherwise RBI would become answerable if things go bad.”

In a letter to Shaktikanta Das, Governor, RBI on Saturday Venkatachalam said: “If Reserve Bank of India does not effectively intervene in the affairs of this Bank now, once again the Bank will run into problems. Slowly, the people and the customers of the Bank have regained their confidence about the Bank and any reversal of the same would be suicidal for the Bank.”

“We strongly believe that RBI’s role in the Board of Directors of the Bank should be reviewed as otherwise RBI would become answerable if things go bad,” Venkatachalam said and sought Das’ personal and urgent intervention.

Venkatachalam said the 93-year old small sized Kerala based Dhanlaxmi Bank around 2008-2012 was making losses.

The bank made a loss of over Rs 850 crore during that period as the top management brought it to serious problems and in the name of modernising it, Venkatachalam recalled.

“With the intervention of RBI, change in top management, and strengthening its capital base, etc. and inducting some reputed people on the Board of Directors of the Bank, the Bank has been making a turnaround and now the Bank has come into profit,” the letter notes.

Venkatachalam said for the past two years, Dhanlaxmi Bank is making profits with the profit for last fiscal being Rs 65 crore-the highest since the bank’s inception.

“In the beginning of this year, the top management has changed and in the recent months we are concerned to observe that perhaps the Bank once again is heading in the wrong direction,” Venkatachalam said.

Earlier the bank closed down many of its branches in north Indian States owing to inadequate controls which landed the bank into problems.

“But we learn that attempts are again being made to open more Branches in northern States while the Bank has inadequate infrastructure to manage the business in those areas,” Venkatachalam sounded the warning bugle.

Expressing concern at the plans to appoint a large number of sales executives and senior executives on contractual and cost to company basis at much higher remuneration Venkatachalam said the move would land the bank in a catastrophe as the already the cost to income ratio is high.

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