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Sensex Opens 240 Points Up; Realty & Banking Stocks Rally
Wed, 21 Mar 09:30 am

Asian stocks are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.39% while the Hang Seng is up 1.23%. The Nikkei 225 is trading down by 0.47%. US stocks advanced modestly on Tuesday as higher oil prices lifted the energy sector, but another slump in Facebook Inc shares curbed gains.

Back home, India share markets opened the day on a strong note. The BSE Sensex is trading higher by 243 points while the NSE Nifty is trading higher by 64 points. The BSE Mid Cap index and BSE Small Cap index both opened the day up by 0.8%.

All sectoral indices have opened the day on a positive note with and witnessing maximum buying interest. The rupee is trading at 65.20 to the US$.

In the news from the IPO space. The Rs 42.3 billion initial public offering (IPO) of state-owned Hindustan Aeronautics Ltd (HAL) was under-subscribed on Tuesday, the last day of the share sale. The IPO witnessed an overall subscription of 99%.

Reportedly, the portion of shares reserved for institutional investors in the HAL IPO saw a subscription of 1.73 times or 173%, while those kept aside for retail investors and high net-worth individuals (HNIs) were subscribed to the extent of 38% and 3%, respectively.

HAL had set a price band of Rs 1,215-1,240 per share for the public offering.

HAL's IPO is a pure secondary offering, where the government of India is selling a total of 34.1 million shares, representing a 10.2% stake in the company.

HAL is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of aircraft, aero engines, helicopters, avionics, accessories and aerospace structures. It is the largest public defence public sector undertaking (PSU) in the country and makes fighter planes such as Su-30 MkI, MiG-21, MiG-27 and Jaguar.

Meanwhile, the Rs 5.1 billion IPO of auto parts maker Sandhar Technologies Ltd saw a subscription of 40% on Tuesday, the second day of its share sale.

The portion of shares reserved for institutional investors in the Sandhar IPO saw a subscription of 89%, while those kept aside for retail investors and HNIs were subscribed to the extent of 27% and 1%, respectively.

Sandhar has fixed a price band of Rs 327-332 per share for its IPO. The offer closes today.

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

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

Moving on to the news from the economy. In the latest development, investment bank Goldman Sachs downgraded its forecasts for India's economy on Tuesday in the wake of Rs 130 billion fraud at Punjab National Bank, warning that it could spark tighter regulation of the banking sector.

This in turn would constrain credit growth. Goldman Sachs said that it has lowered India's GDP growth forecast for the fiscal year 2018-19 to 7.6% from 8% earlier.

Interestingly, Goldman Sachs' revised forecast of 7.6% GDP growth is higher than estimates made by the World Bank and rating agency Fitch.

Fitch, which does analysis on financial year (April- March) basis estimated India's GDP growth for FY19 to be 7.3%, while World Bank, which does analysis on current year (January-December) basis, estimated India growth in the year 2018 to be 7.3%.

Similarly, for the year 2019 and fiscal year 2019-2020, World Bank and Fitch have estimated a GDP growth of 7.5%, while retained its 2019-2020 growth forecast at 8.3%.

The PNB bank fraud detected last month has sent bank shares tumbling, which Goldman Sachs said that it feared a regulatory crackdown after the fraud and could increase Indian banks' provisioning burden and so slow credit growth.

Speaking of developments catching the headlines these days, among the top is the massive fraud at Punjab National Bank in conjunction with the diamond merchant Nirav Modi.

It has put the spotlight on the growing bad loan problems in Indian banks.

And brought to the fore the painful issue of willful defaulters especially after the Vijay Mallya fiasco. The chart below shows the banks that have the highest number of willful defaulters.

Banks with the Highest Number of Willful Defaulters


Unsurprisingly, Punjab National Bank tops the list.

But the others aren't too far behind.

In such an environment, it makes sense for investors to be selective while buying stocks. Focus on value and the underlying fundamentals of the business.

So, what is key to identifying potential multibagger stocks? How does one pick them at the right time and ride them to their full potential? How many multibaggers do you really need to achieve the big riches that you desire?

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