As market continues shattering one level after another, India has finally seen the valuation bubble going bust with so-called safe heaven stocks going through some serious hammering.
Just about a month ago, there prevailed a whole breed of investors who believed in buying quality at any price. In the name of growth, the top 15-20 large-cap stocks continued to get exorbitant valuations while the broader market continued to remain in a bear territory of its own.
The main victim or culprit that led the current fall was India's private banking sector. The bad asset quality pressure has now been finally exposed by the Yes Bank fiasco and sent shockwaves across the sector.
Growing clamor for FSDR Bill #Mandi:
Yes Bank's failure and unprecedented rescue plan from private banks have raised the demand of passing of the Financial Sector Development and Regulation Bill (FSDR) to deal with failed or weak financial institutions.
The bill would allow faster resolution of problems faced by troubled financial companies through an institutional framework rather than the current ad-hoc approach.
The provisions under FSDR Bill deals with insolvency of financial service providers where a Resolution Corporation (RC) would monitor financial firms, anticipate risk of failure, take corrective action, and resolve them in case of such failure. This is a good move for the industry
ITC: Buy for a handsome dividend? #Teji
ITC has raised its dividend payout ratio from ~67% to 85% of PAT, starting with FY20. As a result, ITC's dividend yield will increase to 7.2%, compared to 5.8% based on past payout ratio.
With new announcement, ITC will now have the highest dividend yield among private sector companies in Nifty bringing it in-line with yields of global tobacco stocks.
Utilities available at dirt-cheap valuations #Teji:
After recent sharp correction, Indian Electric Utilities are trading at historically low valuations, high dividend yield and in most cases should remain less affected by the impact of COVID-19.
Regulated utilities like NTPC and PowerGrid, given their RoEs above 15.5% and cost pass-throughs are unlikely to be impacted by COVID-19 or its consequent economic slowdown.