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Sensex Opens in Green; Pharma & Realty Stocks Gain
Wed, 20 Jun 09:30 am

Asian share markets are mixed today. The Nikkei 225 is flat while the Hang Seng is down 0.1%. The Shanghai Composite is trading down by 1.1%. US stocks fell on Tuesday as a sharp escalation in the trade dispute between the United States and China rattled markets and put the Dow Jones Industrial Average back in negative territory for the year.

Back home, India share markets opened the day on a positive note. The BSE Sensex is trading up by 115 points while the NSE Nifty is trading up by 38 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.4% & 0.3% respectively.

Barring PSU stocks, all sectoral indices have opened the day in green with metal stocks and healthcare stocks witnessing maximum buying interest. The rupee is trading at 68.15 to the US$.

Pharma stocks opened the day on a mixed note with Aarti Drugs & Orchid Pharma leading the gainers. As per an article in a leading financial daily, Cipla has received final approval for its Abbreviated New Drug Application (ANDA) for Efavirenz Tablets 600mg from the United States Food and Drug Administration (USFDA).

Cipla's Efavirenz Tablets 600mg is AB-rated generic therapeutic equivalent version of Bristol-Myers Squibb Pharma Company's, Sustiva.

It is indicated in combination with other antiretroviral agents for the treatment of human immunodeficiency virus type 1 infection in adults and in pediatric patients at least 3 months old and weighing at least 3.5 kg.

According to IQVIA (IMS Health), Sustiva and its generic equivalents had US sales of approximately US$105M for the 12-month period ending April 2018.

Cipla share price opened the day up by 2.8%.

To know more about the company, you can access to Cipla's latest result analysis and Cipla stock analysis on our website.

To get more updates on share market, click here.

Moving on to the news from the IPO. The government will kick-start its divestment plans for the current financial year with the initial public offering (IPO) of Rail India Technical and Economic Services (RITES), which will open for subscription today.

With a price band set at Rs 180-185 per share, the government is aiming to raise Rs 4.7 billion by selling a 12% stake.

RITES is a Miniratna public sector undertaking (PSU). Broadly, the businesses can be divided into four revenue streams.

First, it provides design, engineering and consultancy services in transport infrastructure such as railways, roads, bridges, highways, and ports. Second, RITES is into leasing, export, maintenance, and rehabilitation of locomotives.

Third, it runs turnkey projects on engineering procurement construction (EPC) basis, largely related to railways and construction of institutional, residential and commercial buildings. Fourth, it is into the manufacturing of wagons, renewable energy generation and power procurement for Indian Railways through joint venture arrangements, subsidiaries or consortium arrangements.

Of the total current order book, more than 70% of the orders are from central and state governments. The company has also undertaken projects in 55 countries, including in the Asian, African, Latin American, and the Middle East regions.

The IPO consists of an offer for sale of 25.2 million (amounting to 12.6% stake) shares by the government.

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.

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

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