Indian Share Markets Open Flat; Metal and IT Stocks Lag

Thu, 4 Apr 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 0.2% while the Hang Seng is up 0.5%. The Nikkei 225 is trading up by 0.3%. US stocks edged higher on Wednesday, extending a strong start to the quarter as a rally among chipmaker shares provided a boost to the broader market on growing hopes of a trade deal between Washington and Beijing.

Back home, India share markets opened on a flattish note. The BSE Sensex is trading up by 26 points while the NSE Nifty is trading up by 28 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.2% and 0.1% respectively.

Sectoral indices have opened the day on a mixed note with realty stocks and telecom stocks leading the pack of gainers. Metal stocks and information technology stocks have opened the day in red.

The rupee is currently trading at 68.44 against the US$.

Indian rupee on Wednesday closed at an 8-month high against US dollar after foreign investors pumped a combined of over US$10 billion in local equity and debt market.

Possible rate cut by Reserve Bank of India for second time in its bi-monthly policy due today and gains in Asian currencies amid renewed optimism over a possible US-China trade deal also boosted sentiment.

The rupee ended at 68.43 a dollar, a level last seen on 1 August 2018, up 0.5% from its previous close of 68.75. The home currency opened at 68.81 a dollar and touched a high of 68.39.

Further, since mid-February till date, foreign investors have bought US$8.5 billion in equity and US$2 billion in debt So far this year, the rupee has gained 1.7%, while foreign investors have bought US$8.4 billion in equity and US$1.3 billion in debt market.

Interestingly, foreign investors are back in the news.

The recent surge in the Indian stock markets can be also attributed to the strong foreign investor inflows into Indian equities.

The chart reveals the monthly trend in foreign investor flows into Indian equities over the last five years. The period almost coincides with the term of the Modi government.

Are Foreign Investors Coming Back to Indian Equities?

During this period, you can see that foreign investor participation in Indian equities shrank.

Over the last five years, foreign investors were net sellers in 24 months. Effectively, foreign investors were net sellers 40% of the time.

The chart shows that the highest monthly net foreign investor inflow over the last five years was recorded in March 2017 at Rs 337.8 billion.

However, foreign investor flows are influenced by a myriad of global factors and are susceptible to change course anytime.

Presently, investors are awaiting Reserve Bank of India's bi-monthly policy.

The RBI had reduced the repo rate by 25 basis points in its February meeting after a gap of 18 months.

A back-to-back cut in interest rate would provide relief to borrowers in the election season.

Moving on to the news from IPO space. The initial public offering (IPO) of diagnostic chain Metropolis Healthcare was subscribed 9% on the first day of bidding on Wednesday.

The Rs 12-billion IPO received bids for 0.7 million shares as against the total issue size of 7.7 million shares.

The price range for the offer, which would close on Friday, has been fixed at Rs 887-880 per share.

Meanwhile, the IPO of Rail Vikas Nigam has subscribed 1.8 times on April 3, the last day for subscription.

The public issue has received bids for 463 million equity shares against offer size of 253.4 million shares (excluding anchor investors' portion).

Reportedly, the government is expected to raise about Rs 4.8 billion by selling 12.1% stake in Rail Vikas Nigam Ltd (RVNL) with both retail and institutional investors lapping up the shares reserved for them.

This is the first Central Public Sector Enterprise (CPSE) disinvestment in the current fiscal, which started on April 1.

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.

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 how to safely profit from IPOs, download this FREE report now and discover How to Get Rich with IPOs.

And 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!

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