Sensex Opens Lower; PSU & Metal Stocks Top Losers

Fri, 16 Mar 09:30 am

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Asian stocks are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.05% while the Hang Seng is down 0.22%. The Nikkei 225 is trading down by 0.24%. Meanwhile, The Dow Jones industrial average rose on Thursday, but the S&P 500 and Nasdaq composite closed lower as market participants assessed the possibility of a trade war.

Back home, India share markets opened the day on a negative note. The BSE Sensex is trading lower by 123 points while the NSE Nifty is trading lower by 28 points. The BSE Mid Cap index and BSE Small Cap index both opened the day up by 0.2%.

Sectoral indices have opened the day on a mixed note with healthcare stocks and realty stocks witnessing maximum buying interest. While, PSU stocks and metal stocks are trading in red. The rupee is trading at 64.94 to the US$.

In the news from the economy. India's trade deficit widened in February over the same month last year but narrowed from an over four-year high last month. This came on the back of growing exports and moderating imports.

Trade deficit, the gap between exports and imports, widened 36.4% from a year ago at US$12 billion, according to data released by the commerce ministry. The deficit stood at US$16.3 billion last month, the widest since May 2013.

India's exports rose 4.5% year-on-year to US$25.8 billion in February, while imports grew 10.4% to US$37.8 billion in the same period. The government is looking at a 6.5% export growth for the year, the reports noted.

Growth was led by increasing outbound shipments of petroleum products, and organic, inorganic chemicals. Exports of gems and jewellery, which is typically the second major contributor to the bill, declined 5.14%. Engineering goods exports saw a marginal decline last month.

Notably, the World Bank, in a prior report, said that while India's openness to trade has increased significantly in the long-run, there were signs of slowdown in the medium-term. The Reserve Bank of India, in its latest monetary policy review, had said that export growth is expected to improve.

On the import front, shipments of crude oil, coal, pearls and precious stones inflated the bill. Gold imports declined for the second straight month, while machinery imports grew. Brent crude oil prices fell 4.74%, and prices of the yellow metal too declined 1.58% last month. The two commodities contribute nearly a third to the country's imports.

Moving on to the news from the IPO space. Bandhan Bank's Rs 44.73 billion initial public offering (IPO) saw a subscription of 42% on the first day of bidding on Thursday.

The portion of shares reserved for institutional investors in the Bandhan Bank IPO was subscribed 1.26 times, while those for retail investors and high net-worth individuals (HNIs) saw a subscription of 12% and 1%, respectively.

The Bandhan Bank IPO received bids for 35 million shares against the total issue size of 83.5 million shares.

The issue, which will close on 19 March, is in a price band of Rs370-375 per share.

Bandhan Bank's IPO will the largest by a local bank.

The Kolkata based Bandhan Bank along with IDFC Bank received the final nod to start banking operations by RBI in 2015. One of the conditions of the license was public listing within three year which the bank will fulfil now. It started operations on 23 August 2015 and converted its microfinance business into a bank. As of September 2017, it had 864 branches in 33 states across the country.

Meanwhile, public sector helicopter-maker Hindustan Aeronautics (HAL) Rs 42.3-billion initial public offer, through which government is divesting 10.2% holding, will hit the market today.

The company is selling 10.2% of its equity through an offer-for-sale route through the IPO and has fixed a price band of Rs 1,215-1,240 a share for the offer that will close on March 20.

The sale is part of the governments Rs 750-billion divestment process, which for the first time in many years, has already crossed the target.

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

Speaking of IPOs, the demand for IPO's has reached sky-high levels. Avenue Supermarts was seen as the first company last year to cross the 100-time subscription mark swiftly followed by CDSL and Dixon technologies, among others.

IPO Subscription Times (2017)

This euphoria is something similar to what was seen in 2007-08. When everyone around you is clamoring to get a piece of the IPO pie, it makes sitting tight difficult. And, why should you sit tight when stocks like Avenue Supermart lets you pocket a cool 100% gain from day 1 of the listing?

History suggests that these cases are few and far between. More than 70% of the IPOs listed in 2007 and 2008 are in the red, even today when the Sensex is at an all-time high.

A merit-based selection primarily including valuation, business, and management quality is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often than not.

To know more, you can download our FREE report - How to Get Rich with IPOs. This guide will show you how to safely profit from the ongoing IPO rush.

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

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