Sensex Opens Marginally Lower; Power Grid Jumps 4%

Fri, 23 Apr 09:30 am

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Asian stock markets are trading on a mixed note today. The Nikkei is trading down by 0.8% while the Hang Seng is up 1%. The Shanghai Composite is trading higher by 0.1%.

In US stock markets, Wall Street indices ended sharply lower on Thursday, seeing the biggest one-day slide since early March, following a news report that said President Joe Biden is weighing a proposal which would nearly double the capital-gains tax for wealthy individuals.

Equities gave up modest gains to end lower after reports emerged that Biden would propose nearly doubling the capital-gains tax rate for Americans earning more than US$ 1 million a year to 39.6% from the current base rate of 20%.

White House Press Secretary Jen Psaki said, "we're still finalizing what the pay-fors look like," after being asked about the capital gains tax plan at a press briefing Thursday.

The Dow Jones Industrial Average fell 321 points, or 0.9%, the largest one day point and percentage decline since Thursday, March 4, 2021. The Nasdaq also fell 0.9%.

Back home, Indian share markets have opened on a negative note, following the trend on SGX Nifty.

The BSE Sensex is trading down by 145 points. Meanwhile, the NSE Nifty is trading lower by 39 points.

Power Grid is among the top gainers today. ICICI Bank, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened up by 0.6%. The BSE Small Cap index is trading higher by 0.8%.

Sectoral indices are trading on a mixed note with stocks in the metal sector and power sector witnessing buying interest.

Banking stocks and telecom stocks, on the other hand, are trading in red.

The rupee is trading at 74.98 against the US$.

Gold prices are trading up by 0.2% at Rs 47,848 per 10 grams.

Gold rose today and was poised for a third straight weekly rise as a softer US dollar, falling Treasury yields and a dip in US equities encouraged investors to flock towards bullion.

Speaking of gold, in his latest video for Fast Profits Daily, Vijay Bhambwani explains why he thinks the gold and silver bull markets are back on track.

A few days ago, Vijay had recorded a video titled, The Indians Are Coming. In the video, Vijay highlighted the sharp increase in gold buying by Indian households and how this was driving global gold prices higher.

In the video below, Vijay also shares his targets for both gold and silver in 2021 and 2022.

Tune in to find out more:

In news from the media sector, Dish TV is among the top buzzing stocks today.

Jawahar Goel, promoter and managing director of Dish TV, has offered a "substantial portion" of his equity in the firm as security for the credit facilities availed of by the Essel group, Subhash Chandra, chairman and group promoter, said on Thursday.

Dish TV is a direct-to-home (DTH) company, and the stake of the promoter family led by Goel, who is Chandra's brother, stands at 7.3% as per BSE data.

However, the promoter stake has been pledged to lenders who have been revoking shares. In just a year, the stake has fallen from nearly 55% to 7.3%.

Yes Bank is now among the key shareholders in Dish TV, holding 24.2% in the firm. Last year, the private lender had picked up 24.2% in Dish TV after the latter defaulted on a loan.

Deutsche Bank, Housing Development Finance Corporation (HDFC), and IndusInd Bank hold 6.2%, 4.7%, and 3.8%, respectively.

Chandra said he was committed to releasing the pledge offered by his brother and that it would not be done at a low price.

"We wish to deny all the speculation pertaining to the shares being released at a lower price and sold to third-party investors at a higher price. This is baseless and incorrect. The (Essel) group has no such intentions whatsoever," Chandra said.

Dish TV share price has opened the day up by 1.7%.

Moving on to news from the power sector, Power Grid Corporation of India is preparing to launch the first ever InvIT (infrastructure investment trust) IPO by a state-owned firm, on April 29.

An InvIT is a collective investment scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.

Note that the above move by Power Grid comes at a time when the government has set a disinvestment target of Rs 1.75 lakh crore for FY22 and is betting big on initial public offerings (IPOs) by Life Insurance Corporation and Air India IPOs, after coming up short in the previous financial year.

Media reports state that this is a big transaction and the size of the IPO is likely to be around Rs 77 billion, with a primary component of around Rs 45 billion and the balance making up the secondary component.

The price band is likely to be announced on April 29.

Sources familiar with the matter said strong interest has been seen from stable yield seekers and a clutch of global pension funds, global long only funds, domestic infra funds and leading mutual funds and insurance players are keen on this offering.

"The power transmission sector has been insulated from the impact of Covid-19 and the government is looking to unlock value by monetising 5 assets," said a person familiar with the matter.

ICICI Securities, Axis Capital, Edelweiss Financial Services & HSBC Securities and Capital Markets are the investment banks working on the InvIT IPO according to the DRHP filed with markets regulator.

National Highway Authority of India (NHAI) is another state-owned firm that is exploring an InvIT IPO to raise around Rs 50 billion.

So far, the private sector has seen two InvITs namely IndiGrid InvIT, backed by KKR and Sterlite Power Grid Ventures and IRB Infra InvIT, backed by the infrastructure firm and affiliates of GIC.

We will keep you updated on the latest news from this space. Stay tuned.

Speaking of the power sector, it is interesting to note that the power exchanged in India is about 4.5% of the overall power production, as can be seen in the chart below:

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, India's power sector is currently in transition. It is driven by increasing reliance on short-term contracts and electricity spot markets.

This transition to the short-term market is happening due to quickly evolving industry dynamics.

Tanushree believes the Indian power sector will see a surge in spot power volumes due to certain factors.

In August 2020, Tanushree recommended a high-quality stock from this space. Subscribers can read the report here (requires subscription).

And if you are not a StockSelect subscriber, here's where you can sign up.

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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