Rising Crude Oil Prices, IndoStar Capital Finance IPO, and Top Cues in Focus Today

Thu, 10 May Pre-Open

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   09:30 am   

   12:30 pm   

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Share markets in India closed on a positive note yesterday. Gains were largely seen in the IT sector and capital goods sector.

At the closing bell yesterday, the BSE Sensex stood higher by 103 points (up 0.3%) and the NSE Nifty closed up by 24 points (up 0.2%). The BSE Mid Cap index was down 0.6%, while the BSE Small Cap index was down by 0.1%.

Top Stocks in Action Today

From the automobile space, Tata Motors share price will be in focus today as the company's subsidiary, Jaguar Land Rover (JLR) reported growth in its April sales numbers. JLR's sales grew by 11.9% in April, compared to the same period last year. The sales stood at 45,180 units and were primarily driven by introduction of new models, including the Range Rover Velar, the Land Rover Discovery and the Jaguar E-PACE.

From the pharma space, Glenmark Pharma share price will be in focus as the company was issued a show cause notice by the Indian drug regulator yesterday.

Market participants will be also tracking PC Jeweller share price ahead of its board meet on Friday on a share buyback proposal.

IndoStar Capital Finance IPO

The initial public offer (IPO) of non-banking finance company (NBFC), IndoStar Capital Finance was subscribed 0.36 times during closing market hours yesterday.

On Tuesday, the company had raised Rs 5.5 billion from anchor investors by allotting 9.7 million shares to 24 anchor investors at the upper end of the IPO price band of Rs 570-572 per share.

The issue closes for subscription on Friday.

Indostar Capital Finance is a non-banking finance company (NBFC) registered with the Reserve Bank of India as a systemically important non-deposit taking company.

It is primarily engaged in providing structured term financing solutions to corporates and loans to SME borrowers in India. It recently expanded its portfolio to offer vehicle finance and housing finance products.

The IPO comprises fresh issuance of shares worth Rs 7 billion, besides, an offer-for-sale involving up to 20 million shares.

Proceeds of the fresh issue will be used to augment capital base to meet future capital requirements.

The promoters and the existing shareholders will dilute up to 30% of their ownership through the public issue.

The company is 42.3% owned by the private equity fund Everstone Capital, while ACP Libra owns 16.35% and Beacon India PE owns 10.8%.

To know more about the company, you can read our IPO analysis of IndoStar Capital Finance (requires subscription).

Speaking of IPOs, the demand for IPO's had reached sky-high levels last year.

One shall note that, 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.

To know more, download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the IPO rush.

Crude Oil Prices Surge as US Exits Iran Deal

Crude oil prices spiked yesterday as US President Donald Trump yesterday pulled the United States out of nuclear deal with Iran.

As per the news, Trump called the Obama-era deal decaying and rotten and an embarrassment to him as a citizen.

In response, Iran said it was preparing to restart uranium enrichment, key for making both nuclear energy and weapons.

The above development has raised the risk of conflict in West Asia, upsetting European allies and casting uncertainty over global oil supplies.

Note that crude oil prices have been witnessing a rising trend of late. Prices have been escalating due to a pick-up in global demand coupled with supply cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia. Even geopolitical tensions between US, Russia, North Korea and Iran have kept prices on the boil.

What does rising crude prices mean for stock markets?

Richa Agarwal, editor of Hidden Treasure, tracks the oil and gas sector very closely. She believes the rise in crude oil prices is a bearish sign for stock markets globally. At the same time, any market correction, will throw up interesting buying opportunities in small-cap stocks.

This is what she wrote...

• After hitting a low of US$ 30 per barrel in January 2016, prices have more than doubled to US$ 68 in April 2018.
  
  The recent news of Saudi Arabia wanting crude oil prices to touch US$ 100 per barrel doesn't help. The 2008 recession was preceded by crude oil touching US$ 150 per barrel. Any movement upwards can result in a possible downturn for the global market.
  
  While the Hidden Treasure team looks for long-term wealth creators, such macro situations can help to recommend such stocks at a bargain. The ones who keeps calm, when everyone else is losing their heads, will gain the most when the tide turns.

How the above decision by the US affects crude oil prices in the near term remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

India Slips to 6th Position Globally in Biz. Optimism Index

Grant Thornton's quarterly global business survey showed India slipped to the 6th position globally in the business optimism index for the first quarter of this year.

With a score of 89, India is at the sixth place in the index.

Also, another survey from Dun & Bradstreet showed that optimism level among Chief Financial Officers (CFO) about the country's financial and macro-economic conditions for the second quarter of this year has declined nearly 18%. This is recorded as four-year low.

The composite CFO Optimism Index declined 17.8%, on a QoQ (quarter-on-quarter basis), to 96.2 for the second quarter of 2018.

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