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Sensex Trades Flat; Bank Stocks Drag
Tue, 9 May 01:30 pm

After opening the day on a positive note, share markets in India are currently trading on a flat note with a positive bias. Sectoral indices are trading on a mixed note with stocks in the realty sector and stocks in the metal sector trading in green, while stocks in the banking sector are leading the losses.

The BSE Sensex is trading up by 33 points (up 0.1%), and the NSE Nifty is trading up by 12 points (up 0.1%). Meanwhile, the BSE Mid Cap index is trading up by 0.3%, while the BSE Small Cap index is trading up by 0.6% The rupee is trading at 64.60 to the US$.

In news about the economy. The International Monetary Fund (IMF) in a report said that India's gross domestic product (GDP) growth is expected to rebound to 7.2% in the 2017-18 fiscal and 7.7% in 2018-19 after disruptions caused by demonetisation.

The IMF remarked that the temporary disruptions (primarily to private consumption) caused by cash shortages accompanying the currency exchange initiative are expected to gradually dissipate in 2017 as cash shortages ease.

The IMF bases its outlook on a favorable monsoon and a resolution of supply-side bottlenecks in the short term. However, it raised caution over weakness in Indian banks' weak balance sheets.

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According to the report, in India, improving productivity in the agriculture sector, which is the most labour-intensive sector and employs about half of Indian workers, remains a key challenge.

According to data released by the government's Central Statistics Office (CSO) India's Gross Domestic Product (GDP) grew at a rate of 7% in the December quarter, despite effects of notebandi in November 2016.

GDP Growth in Recent Quarters

The CSO is expected to release the March quarter GDP numbers soon. The government believes that GDP growth for FY17 to be at 7.1%. Mind you, this would still be below the 7.6% growth recorded in FY16. We believe, FY17 GDP growth could, in fact be significantly lower than 7.1%.

Here is what Dr Jim Walker, founder and chief economist of Asianomics Group, had to say about the government's estimates in his latest Asianomics Macro update.

The government's new growth forecasts are not only optimistic but downright bizarre. The market is concerned that even with the new (still optimistic) growth forecast of 7.1%, the government's budget deficit target of 3.5% of GDP will be overshot.

A while back, in an interview with Vivek Kaul and Rahul Goel, CEO of Equitymaster, Dr Jim Walker had shared his views on a variety of topics including the Indian and Chinese economies. It's worth revisiting.

If the IMF's forecasts hold true, it would mean that India would remain one of the fastest growing economies in the world. And with this pace of growth, there are bound to be countless growth opportunities in the stock markets.

So, how can one find such opportunities?

We believe a few super investors could provide the clue. These are the guys who've beaten the markets black and blue and have an eye for multi bagger stocks irrespective of the macro environment.

With respect to which super investors to follow, our Research analysts Kunal and Rohan have could be of great help courtesy their project, The Superinvestors of India.

To know more about these superinvestors and their stock picking approach, download a free copy of - The Super Investors Of India.

In news from the IPO space. The initial public offer (IPO) of Housing and Urban Development Corporation Ltd. (HUDCO) which opened for subscription yesterday saw a good response on the opening day, with the issue getting subscribed 63%, or 0.63 times.

The QIB portion was subscribed 18%, while the NII portion saw subscription of 16%, retail 152% and the employee portion was subscribed 1%.

Hudco has set a price band of Rs 56-60 per share for the IPO. The IPO comprises an offer for sale of 200.19 million shares by the central government, which, at the upper end of the price band, could fetch it Rs 12 billion.

The Hudco IPO is a pure offer for sale which will see the government sell a 10% stake in the company. Hudco will not receive any proceeds from the sale of shares.

IDBI Capital Markets and Securities Ltd, ICICI Securities Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd and SBI Capital Markets Ltd are managing the initial share sale.

State-owned HUDCO has been providing loans for housing and urban infrastructure projects in India for more than 46 years. The company, which provides housing loans across three categories- social housing, residential real estate and retail finance-has been conferred the Miniratna status by the government of India.

IPO of the 'Miniratna' that provides loans for housing and urban infrastructure projects, will close on May 11.

Should one subscribe to the offer? To know our view on the HUDCO IPO, click here (requires subscription).

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

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Nov 23, 2017 09:23 AM