Tale of the Tape 

Howdy folks!

$NIFTY50.NSE ( ▼ 0.68% ) and Sensex ended mixed after markets mostly erased early trading losses. Midcaps (+0.7%) posted decent gains, while Smallcaps (-0.8%) saw selling pressure. The advance-decline ratio was in favour of the bears (3:2).

Most sectors ended in the green. Real Estate (+3.6%) was the top gainer, followed by Oil & Gas (+1.2%) and NBFCs (+0.6%). IT (-0.7%) and Auto (-0.3%) ended lower.

$INDUSINDBK.NSE ( ▼ 1.03% ) got KO-ed after a major accounting goof-up. Read our top story to get the lowdown on WTF happened to the lender.

Is the US headed for a recession? More details below on what this means for Indian markets.

$PAYTM.NSE ( ▼ 0.92% ), $GENSOL.NSE ( ▼ 2.0% ), and $TATACOMM.NSE ( ▲ 0.07% ) saw big moves today. Check out their charts below to find out why.

Deal reactions. $SUNPHARMA.NSE ( ▲ 0.2% ) was up after  it said it would acquire a US oncology firm for over Rs 3,000 cr. $ZYDUSLIFE.NSE ( ▼ 0.21% ) was in focus after it said it would acquire French firm Amplitude Surgical for over Rs 2,400 cr. 

$HEG.NSE ( ▲ 0.3% ) was up after ace investor Madhusudhan Kela’s firm agreed to invest Rs 500 cr in an associate firm.

$BEL.NSE ( ▲ 2.24% ) gained after bagging fresh orders worth Rs 843 cr for radars, aircraft traffic systems and electro-optic repair facilities.

$CENTUM.NSE ( ▲ 0.67% ) was up after launching its Rs 125 cr QIP.

Here are the closing prints:

Stock
New Day, New Crisis

Another day, another banking crisis! $INDUSINDBK.NSE ( ▼ 1.03% ) wiped off over Rs 19,000 cr in market cap, after it reported “discrepancies” worth 2.35% of its networth in its derivatives portfolio. Yikes. Here’s what you need to know.

WTF is the problem: When we say ‘derivatives’, it doesn't mean the lender was gambling for no reason in F&O. It was doing what most big firms have to do, taking positions to hedge their forex deposits & borrowings. The only problem? Its accounting standards were weak AF and when the RBI imposed stricter rules, IndusInd found it had either underestimated losses or costs.

How big is the hit?: The bank expects a roughly Rs 1,500-cr impact. To put this in context, the bank reported a Q3 profit of Rs 1,401 cr so essentially this will wipe out a full quarter’s bottomline whenever it recognises the burden. PS - there are no capital adequacy issues, but it's still rough.

Tbh, what’s worse is the series of events that lead to this. Aap chronology samajh lijiye:

• IndusInd’s CFO resigns just before Q3 results; the lender’s quarterly profits dropped a whopping -39% YoY

• The RBI granted a 1-year-extension to the current CEO even though the board had re-appointed him for a 3-year-tenure. This is extremely sus, especially because its the second time the central bank has given Kathpalia a shorter tenure.

• Derivatives bomb goes off. Bank appoints external auditor whose report we’ll get by March-end.

Big Picture: IndusInd has lost the one thing a bank should never lose -- trust. Now it has to deal with this accounting mess while the search for a new CEO kicks off. Analysts say expect an overhang to continue. FYI - the lender was hit with a flurry of downgrades including Nuvama, Motilal Oswal and Emkay.

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