Sensex Opens Flat; ICICI Bank & Infosys Top Losers

Mon, 23 Apr 09:30 am

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Asian share markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.3% while the Hang Seng is down 0.2%. The Shanghai Composite is trading down by 0.1%. US stocks dropped on Friday as a decline in Apple pushed the technology sector lower. A rise in interest rates also kept a lid on equities.

Back home, Asian share markets opened the day on a flat note. The BSE Sensex is trading down by 9 points while the NSE Nifty is trading down by 6 points. The BSE Mid Cap index and BSE Small Cap index both opened the day on a flat note.

Sectoral indices have opened the day on a mixed note with and witnessing buying interest. While, IT stocks & bank stocks have opened the day in red. The rupee is trading at 66.02 to the US$.

In the news from the banking sector. HDFC Bank reported 20.3% year-on-year growth in net profit to Rs 48 billion for the quarter ended 31 March 2018.

The profits were boosted by both interest and non-interest-income growth with net interest income growing 17.7% to Rs 106.6 billion and other income by 22.7% to Rs 34.5 billion during the quarter.

Within non-interest income, profit on sale of investment component was Rs 0.2 billion compared with Rs 1.8 billion in the year-earlier period.

The lender also reported 18.7% growth in advances over March 2017 contributed by retail loans. The loan mix between retail and wholesale was in 57:43 ratio as compared with 55:45 at the end of December quarter. Retail loans grew 27.4% and wholesale loans 9.4%.

The bank's gross non -performing assets were at 1.3% of gross advances as on 31 March 2018 against 1.3% as on 31 December 2017 and 1.1% as on 31 March 2017. In absolute terms, gross NPA in March end was Rs 86.1 billion as compared with Rs 58.9 billion in the year earlier period.

The lender had made a provision of Rs 11.3 billion during the quarter for bad loans as compared with Rs 9.9 billion during the same period of last year.

Total provision made by the bank was Rs 15.4 billion as compared with Rs 12.6 billion.

On the liabilities front, total deposits increased by 22.5% while term deposit growth was 33.2%. The share of low-cost deposits at the end of March was 43.5% as compared with 43.9% in December end.

opened the day down by 0.2%.

Moving on to the news from IPO space. The initial public offering (IPO) market is gearing up for a burst of activity, with at least 12 companies planning to raise more than Rs 170 billion over the next two months, after a quiet start to the June quarter.

Reportedly, the introduction of the new Indian accounting standards (IndAS) as one of the reasons why IPO-bound companies have not approached the market so far, this quarter.

All companies, including unlisted ones, having net worth of between Rs 2.5 billion and Rs 5 billion have to prepare their financial accounts for the year ended 31 March 2018 as per the IndAS accounting standards. Companies with net worth of Rs 5 billion or more had to implement the new standard a year earlier.

As per the reports, the pipeline in the June quarter will be very healthy. The market/IPO outlook continues to be strong and robust for the next two quarters if not the entire year.

Several major IPOs, including those of HDFC Asset Management Co. Ltd, auto parts maker Varroc Engineering Ltd, non-banking financial company IndoStar Capital Finance Ltd, microfinancier CreditAccess Grameen Ltd and women's apparel maker TCNS Clothing Co. Ltd, are set to hit the market this quarter.

Other companies that may launch their IPOs in the quarter include seafood exporters Devi Seafoods Ltd and Nekkanti Sea Foods Ltd. Both said they would decide on the timing of the launch after they get regulatory approval for their respective share sales.

In the first quarter of 2018, 14 companies raised a total of Rs 185.9 billion through the IPO route, a more than fourfold increase from the Rs 41.9 billion raised by five companies in the same period a year earlier.

In 2017, 64 companies tapped the IPO market to raise Rs 671.5 billion.

IPO activity last year was dominated by large issuances such as HDFC Standard Life Insurance Co. Ltd, SBI Life Insurance Co. Ltd, ICICI Lombard General Insurance Co. Ltd, New India Assurance Co. Ltd and General Insurance Corp. of India Ltd, which collectively raised Rs 437.6 billion.

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.

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.

Keywords: BSE Sensex, BSE, NSE Nifty, NSE, Indian stock markets, BSE Midcap, BSE Small cap, Rupee Dollar exchange rate, Indian equity market indices, Sensex today, IT & FMCG sector, HDFC Bank share price, HDFC Bank, IPO, IPO analysis, Nikkei 225, Hang Seng, Shanghai Composite, Asian stock markets, Asian indices.

Sector: Banking sector

Description: Indian share markets open flat with Sensex trading down by 9 points, while the Nifty is trading down by 6 points.

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