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Indian Indices End Lower, Updates from the IPO Space, and Top Cues in Focus Today
Thu, 4 Apr Pre-Open | Monish Vora, TM Team

India share markets witnessed selling pressure during closing hours yesterday and ended their trading session on a negative note.

At the closing bell yesterday, the BSE Sensex stood lower by 179 points (down 0.5%) and the NSE Nifty closed down by 69 points (down 0.6%). The BSE Mid Cap index ended the day down 0.8%, while the BSE Small Cap index ended the day down 0.9%.

Sectoral indices ended in the red with stocks in the telecom sector and oil & gas sector witnessing most of the selling pressure.

Top Stocks in Focus Today

From the pharma sector, Lupin share price will be in focus today as the United States Food and Drug Administration (USFDA) has given the company an Establishment Inspection Report (EIR) for its Pithampur facility. The facility was slapped with five observations in an inspection in October.

The receipt of an EIR is considered good news as it means that the company can now use the facility to manufacture items that are meant to be sold in the US.

To know more about the company, you can access to Lupin's Q3FY19 result analysis and Lupin's 2017-18 Annual Report Analysis on our website.

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Jet Airways Becomes the Smallest Operating Pan-India Carrier

Jet Airways share price will also be in focus today. As per an article in The Economic Times, the debt-laden airline's domestic operations now comprise just 12-15 planes, making it the smallest operating pan-India carrier.

Here's an excerpt from the article...

  • Jet is flying 29 planes - ten 737 NGs, seven ATR turboprops for short local routes, and a dozen wide-bodied Airbus A330s and Boeing 777s, compared with 124 planes in December. The four A330s and eight Boeing 777s are used for operating medium and long-haul international flights while the 737 NGs fly on domestic and neighboring international routes and the ATRs on short local routes. The count is expected to fall further.

    Indian rules say an airline must have a 20-aircraft fleet and 120 daily domestic flights to fly international. As such, Jet is undoubtedly flouting the norms.

A government official recently said Jet's curtailment of operations would be reviewed over a period of three months before taking a call. A senior executive at Jet said there was a "grandfather clause", which protected a percentage of international flying rights once an airline had proven itself eligible for such operations.

In addition to grounding a majority of its fleet, Jet defaulted on Indian and overseas loan repayments, vendor dues and salaries, and laid off people.

Banks were to release an immediate additional debt funding of Rs 15 billion for Jet to tide through and part-pay its vendors and employees. People close to the matter said the funds had not been released yet.

Speaking of the aviation sector, while looking at the current demand-supply scenario in the aviation industry, it is important to look at how air passenger traffic is growing.

In February, domestic air passenger traffic reported its lowest monthly passenger traffic growth since January 2015. It registered a marginal annual growth of 5.6%.

Similarly, in January, the number of passengers flown by domestic airlines grew at 9.1% YoY, while in December, it increased by 13% YoY. This is way lower than the historical growth rate of 20% between 2014-2018 period.

As per Research Analyst Sarvajeet Bodas, a slowdown in passenger growth is due to several factors. These include frequent flight cancellations due to grounding of fund-starved Jet Airways' aircraft, pilot shortages faced by IndiGo, NOTAMs (notice to airmen) at various airports, and a rise in airfare etc.

In the last 5 years, we saw a surge of middle-class travelling by plane. But when the ticket price goes up, many of them prefer an alternate mode of transportation.

That shows the price sensitivity of the Indian consumer!

From the IPO Space...

In the news from the IPO space, the initial public offering of Rail Vikas Nigam (RVNL) closed its offer yesterday.

The company will be the third rail PSU to be listed after Rites share price and Ircon International share price.

Incorporated in 2003 by the Ministry of Railways, Rail Vikas Nigam Ltd (RVNL) is a wholly-owned government company, founded as a project executing agency working for and on behalf of the Ministry of Railways.

The company is in the business of executing all types of railway projects including new lines, doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges, construction of cable stayed bridges, institution buildings, etc.

It goes without saying that the company's key client is the Indian Railways. The other clients include various central and state government ministries, departments, and public-sector undertakings.

Ankit Shah has shared the detailed note of the IPO. You can read it here.

Also, the IPO of Metropolis Healthcare Ltd hit the markets yesterday.

The diagnostics company has raised Rs 5.3 billion yesterday by allotting 60.24 lakh shares to 26 anchor investors at 880 per share. The 12-billion offer will run from April 3 to 5 and consists of about 15.3 million shares.

Metropolis Healthcare Limited is a chain of diagnostic companies. It has 106 clinical laboratories, 1130 collection centers in seven countries.

The company also provides analytical and support services for the clinical research projects to some clinical research organizations.

Metropolis offers 3480 clinical laboratory tests and 524 profiles which combines a variety of tests for the specific disease.

Outside India, it has presence in Ghana, Zambia, Kenya, Sri Lanka, and Mauritius for laboratory operations and in UAE, Nepal, Nigeria and Oman for 3rd party services.

Speaking of IPOs, we at Equitymaster believe 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.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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

Read the latest Market Commentary

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