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Indian Indices Continue Momentum; FMCG Stocks Witness Buying
Mon, 19 Jun 11:30 am

After opening the day marginally higher, stock markets in India have continued their momentum. Sectoral indices are trading on a positive note with stocks in the energy sector and FMCG sector witnessing maximum buying interest.

The BSE Sensex is trading up 156 points (up 0.5%) and the NSE Nifty is trading up 38 points (up 0.4%). The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 64.37 to the US$.

In the news from IPO markets, the initial public offer of leading securities depository Central Depository Services (CDSL) will open for subscription today, with a price band of Rs 145-149 per share.

The company is expected to raise Rs 5.10 billion at the lower end of price band and Rs 5.24 billion at higher end of price band.

CDSL, the second largest depository in the country has bagged a sizeable share in the depository market.

Apart from securities depository services, the company has also diversified into other digital services such as KYC services to capital market intermediaries, e-locker, e-voting, National Acadamic Depository services, electronic holding of insurance policies, etc.

The company's IPO comes at a time when equity markets are seeing increased retail participation coupled with the growth seen in digitisation services in the country. CDSL is well placed to benefit from these factors, among others.

To know our view on the CDSL IPO, you can visit our IPO page.

IPOs have caught the frenzy of investors. Looking at the performance of IPOs listed in 2017, one could see the reason why. Almost 75% of the IPOs listed in 2017 till date have given positive returns. Although we are nowhere near the euphoria of 2007, we are slowly but surely getting there.

However, according to Hindu Business Line, till June 2016, only 40% of the IPOs launched between 2004 and 2011 were trading above their issue price, as can be seen from the chart below.

Are IPOs a Sure Shot Way to Make Money?

We, at Equitymaster, have always recommended IPOs cautiously. Here's Rahul Shah, co-head of research at Equitymaster, explaining our rationale behind the approach:

  • 'We know what a dirty game the IPO business is. We've seen it over and over again: It's a game where the odds are stacked against investors. So for us, the equation is simple. We'd rather face criticism in the short run than see our subscribers lose money over the longer term. We weren't afraid to do this during the hot IPO days of 2007, and we're not afraid to do it today.'

The Bottomline: You need to evaluate each IPO on its merits by considering its fundamentals, and most importantly, the valuations. And this is particularly important when the hype surrounding IPOs is at its peak.

If you're new to the enticing world of IPOs, we have something for you...

Our new and completely free report - How to Get Rich with IPOs - will tell you how to find those money spinning IPOs and avoid the disasters in the coming year and beyond.

In other news development, the goods and services tax will kick in from July 1.

This comes as the GST Council has stuck to the scheduled rollout of the new tax regime.

As per the news, the panel has relaxed the time for filing initial invoice wise returns for the first two months. The hospitality industry has got a breather with five-star restaurants getting parity with other AC restaurants at 18% GST and the Rs 5,000 room rent limit moving up to Rs 7,500 for 28%.

Just Released: Multibagger Stocks Guide
(2017 Edition)

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Implementation of GST promises to transform India into a single common market and there are many sectors which will gain immensely from this transition.

The implementation of the same is bound to bring more companies under the new tax regime, thus providing a level playing field to organized players that face huge competition from the unorganized segment.

If you would like to dig deeper into the practical implications of GST, I strongly recommend you download Vivek Kaul's free report, What the Mainstream Media DID NOT TELL YOU about GST.

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

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Aug 23, 2017 10:30 AM

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