Sensex Opens Higher; Coal India Rallies

Tue, 9 Jan 09:30 am

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.15% while the Hang Seng is up 0.23%. The Nikkei 225 is trading up by 0.54%. US stocks closed mixed as investors turned cautious ahead of earnings.

Back home, India share markets opened the day on a positive note. The BSE Sensex is trading higher by 88 points while the NSE Nifty is trading higher by 29 points. The BSE Mid Cap index and BSE Small Cap index both opened the day up by 0.2%.

All sectoral indices have opened the day in green with metal stocks and realty stocks witnessing maximum buying interest. The rupee is trading at 63.35 to the US$.

Coal India share price rallied over 4.7% in the opening trade on the reports that it has raised prices of thermal coal by an average 9%. The decision was taken at a board meeting held on Monday while revised prices would be effective from today. It will make power generation costlier by a similar percentage. Cost of cement and fertiliser production is also expected to rise as a result.

Automobile stocks have opened the day on a mixed note with Ashok Leyland and Maharashtra Scooters being the most active stocks in this space. Tata Motors announced that despite tough conditions in some markets, Jaguar Land Rover achieved record global sales in 2017 with retails of 621,109 vehicles, up 6.5% on the prior year.

Retail sales for the month of December were 55,697, up 0.6% and for the quarter were 154,447 vehicles, up 3.5%.

Further, retail sales in December were up in Overseas markets (19%) and in China (12.6%) but down in the UK (15.8%), US (9.2%) and Europe (4.6%), reflecting weaker market conditions in the UK and to a lesser extent the US.

Jaguar retail sales were 15,079 vehicles in December, down 7.8% compared to December 2016 as solid sales of the long wheel base Jaguar XFL in China and the introduction of the E-PACE were more than offset by softer sales of XE and XJ.

Land Rover retailed 40,618 vehicles in December 2017, up 4.1% compared to December 2016, led by the introduction of the Range Rover Velar and the sales ramp up of the all new Discovery.

Going forward, the company expects going to get tough in UK due to weak consumer confidence and diesel tax.

Tata Motors share price opened the day up by 0.4%.

In another development, the government has announced a stake sale in NMDC through the Offer for Sale (OFS) route.

The government plans to sell 47.4 million shares in the company via OFS over 9-10 January 2018.

The floor price for the OFS is Rs 153.5, a 5.4% discount to yesterday's closing price. The OFS would raise Rs 7280 million for the government assuming that the allocation price is the same as the floor price.

A minimum of 25% is reserved for institutional investors (Mutual Funds and Insurance companies) and 20% is reserved for retail investors. Retail investors would also receive a 5% discount to their allocation price. The offer for Non-retail investors would be open today and for retail investors the OFS would be open on 10 January.

The Centre currently owns 74.9% in the country's largest iron ore producer.

One shall note that, the government has already raised Rs 538.3 billion through disinvestment in public sector firms this fiscal by listing public sector insurers and exchange traded fund.

For the current fiscal year, it has set a target of raising Rs 725 billion via disinvestment, which includes Rs 465 billion through minority stake sales, Rs 150 billion from strategic sale and another Rs 110 billion from listing of insurance firms.

Higher Revenue from Disinvestment?

As per an article in Business Standard, the department of investment and public asset management (DIPAM) is looking to not only to achieve FY18 target, but also aiming to take disinvestment proceeds beyond Rs 900 billion. With this, any shortfall from other revenue items, including GST could be made up by disinvestment.

This optimism is mainly due mega deal of ONGC acquiring HPCL, which could get the exchequer Rs 300 billion. Similarly, there are a number of IPOs lined up which includes the likes of Ircon, Hindustan Aeronautics, Bharat Dynamics, and Mazgaon Dockyards. DIPAM is also working on OFS proposals which includes Indian Oil, Oil India, NHPC, and REC.

Not to mention, extra dividend from the PSUs in addition to disinvestment. With this, the slippage of the deficit could pretty much be negligible, provided there is no major gap in terms of GST collections. It will be interesting to see how the government approaches disinvestment in the coming months.

NMDC opened the day down by 3.5%.

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