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Sensex Opens in Green; Metal & Banking Stocks Gain
Mon, 26 Feb 09:30 am | Rini Mehta, TM Team

Asian stocks are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.46% while the Hang Seng is up 0.62%. The Nikkei 225 is trading up by 0.82%. US stocks rallied on Friday, lifted by gains in technology stocks and a retreat in Treasury yields as the Federal Reserve eased concerns about the path of interest rate hikes this year.

Back home, India share markets opened the day on a positive note. The BSE Sensex is trading higher by 137 points while the NSE Nifty is trading higher by 35 points. The BSE Mid Cap index and BSE Small Cap index both opened the day up by 0.7% & 0.6% respectively.

Barring IT stocks, all sectoral indices have opened the day in green with metal stocks and bank stocks witnessing maximum buying interest. The rupee is trading at 64.82 to the US$.

In the news from the IPO space. Aster DM Healthcare is set to debut on the bourses today. The private healthcare service providers, which sold its shares in the primary market from February 12 to 15, received bids for 48.8 million shares (1.3 times) against 37.4 million shares on offer.

The quota for qualified institutional buyers (QIBs) was subscribed 2.1 times, while non-institutional investors' shares was subscribed 0.6 times and retail portion 1.2 times.

The company, which sold the IPO in the price band of Rs 180 to Rs 190, has fixed the issue price at Rs 190.

Aster operates in multiple GCC (Gulf Cooperation Council) states and in India.

The issue comprised a fresh issue of shares worth up to Rs 7.3 billion and an offer for sale of 13.4 million shares by promoter Union Investments. The hospital chain was started by non-resident Indian businessman Azad Moopen.

Meanwhile, Jodhpur-based Engineering, procurement and construction (EPC) player HG Infra Engineering is all set to hit the primary market today with its Rs 4.6 billion initial public offering (IPO).

The company on Saturday garnered over Rs 1.4 billion from anchor investors.

The IPO consists of a fresh issue of shares aggregating up to Rs 3 billion and an offer for sale of up to 0.6 million scrips by the existing shareholders. The price band of the issue has been fixed at Rs 263-270 per share. The issue will close on February 28.

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To know our view on the above IPOs, you can read our IPO analysis here.

Also, if you want to know more about IPOs and whether they are right for you, you can download our free special report - How to Get Rich with IPOs.

If you've been tracking the demand for IPOs, you would certainly think that 2017 is the year of IPOs. For one, IPO subscriptions were at sky high levels. But if the performance of recently listed IPOs are anything to go by, they have flattered to deceive.

Of the 5 recent high profile IPOs which listed on the stock market, four have given negative returns as of yesterday's closing price.

The IPO activity in FY17 is mainly driven by Offer for Sale (OFS) rather than fresh issues. An OFS is a route through which existing promoters and private equity investors offload their stake. Here, the money from the sale goes to the selling shareholder. Whereas, in a fresh issue, the money raised goes to the company who, normally, utilizes this money to repay debt, for capital expenditure, etc.

Also, the number of Private Equity (PE) investors exiting these companies raised a red flag. These PE investors had bought a stake in the IPO recently at a fraction of the listed price. Sensing the frenzy, they were able to offload their stake with multifold returns.

The only person left high-and-dry here was the retail investor. And, this is not a recent occurrence. The IPO euphoria is something similar to what was seen in 2007-08. More than 70% of the IPOs listed in 2007 and 2008 were in the red, even today when the Sensex is at an all-time high.

Poor IPO Returns Post Listing

So, for the retail investor, it is very important to ignore the noise and focus on the fundamental and valuations on the table. And more often than not, this approach works much better than following the herd.

Moving on to the news from pharma sector. As per an article in a leading financial daily, Dr Reddy's has received the establishment inspection report (EIR) from the US Food and Drug Administration (USFDA) for its formulations facility in Srikakulam, Andhra Pradesh.

The company said the USFDA has maintained OAI (Official Action Indicated) status at its API manufacturing plant in Srikakulam.

An OAI status is equivalent to finding of objectionable conditions at the audit site and also an indicative of regulatory and/or administrative sanctions by FDA.

The USFDA issues an EIR to an establishment that is the subject of an FDA or FDA-contracted inspection when the agency decides to close the inspection.

In April 2017, the company had informed about completion of the audit at its API manufacturing plant in Andhra Pradesh and issuance of two observations by the US drug regulator.

However, Dr Reddy's is addressing those issues, the reports noted.

Notably, the list of pharma sector woes is long. So, is there light at the end of the tunnel? Girish Shetty, Research Analyst thinks there is.

As per him, it doesn't make sense to paint all pharma stocks with the same brush. The leaders of the industry will certainly survive this phase. There are interesting, niche pharma stocks that are worth your attention.

Facing pricing pressures in the domestic and export markets, currency fluctuations, as well as manufacturing issues related to their plant, there is a transformation happening in the overall sector as to how business is done and will be done in the future.

Dr. Reddy's Lab share price opened the day down by 2.6%.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Stock Market Updates

Most Active Small-Cap Stocks Today; JET AIRWAYS the Most Traded (Today's Market)

Dec 17, 2018 04:19 PM

Here's a list of most active small-cap stocks today. It also includes information on BSE Smallcap index and the broader benchmark indices.

Top 5 Mid-Cap Gainers Today; INDRAPRASTHA GAS Leads the Pack (Today's Market)

Dec 17, 2018 04:18 PM

Here's a list of 5 stocks that gained the most in the BSE Mid-Cap Index today. It also includes information on BSE Mid-Cap index and the broader benchmark indices.

The BSE METAL Index has hit an all-time high at 11,898 (up 2.1%) (Today's Market)

Dec 17, 2018 03:33 PM

The BSE METAL Index has hit an all-time high at 11,898 (up 2.1%). Among the top gainers in the BSE METAL Index today are JINDAL STEEL & POWER and COAL INDIA. Meanwhile, the BSE Sensex has surged 0.9% to 36,312.

PIDILITE INDUSTRIES at 52 Week High; BSE 500 Index Up 1.0% (Today's Market)

Dec 17, 2018 03:21 PM

PIDILITE INDUSTRIES share price has hit a 52-week high. It is presently trading at Rs 1,195. BSE 500 Index is up by 0.7% at 14,530. Within the BSE 500, PIDILITE INDUSTRIES (up 2.1%) and BALMER LAWRIE (up 12.8%) are among the top gainers, while top losers are RELIANCE NAVAL & ENGINEERING LTD and PRESTIGE ESTATES.

PRESTIGE ESTATES Plunges by 6%; BSE REALTY Index Down 0.2% (Today's Market)

Dec 17, 2018 03:11 PM

PRESTIGE ESTATES share price has plunged by 6% and its current market price is Rs 224. The BSE REALTY is down by 0.2%. The top gainers in the BSE REALTY Index are SOBHA LIMITED (up 2.2%) and INDIABULLS REAL EST (up 2.1%). The top losers is PRESTIGE ESTATES (down 5.9%)..

Sensex Trades Over 250 Points Up; Tata Motors & Power Grid Top Gainers (Today's Market)

Dec 17, 2018 12:30 pm

The BSE Sensex is trading up by 252 points, while the NSE Nifty is trading up by 59 points.

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