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Mid, Smallcaps in Favour Today
Mon, 27 Jun Closing

The Indian equity markets began the week on a dull note as the indices were trading near the dotted line for majority part of the day. At the closing bell, the BSE Sensex closed higher by 5 points, while the NSE Nifty finished higher by 6 points. Meanwhile, the S&P BSE Midcap & the S&P BSE Small Cap witnessed buying activity and finished up by 0.8% and 1.6% respectively. Gains were largely seen in healthcare and capital goods' stocks.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 2.39% and the Shanghai Composite rose 1.45%. The Hang Seng lost 0.21%. European stocks extended losses as the fallout from Britain's decision to leave the European Union (EU) continued, sending the pound to a 31-year low. Germany's DAX is down 1.55%, while France's CAC 40 is off 1.37% and London's FTSE 100 is lower by 1.21%.

The rupee was trading at 67.90 against the US$ in the afternoon session. Oil prices were trading at US$ 47.65 at the time of writing.

Investment and finance companies flourished in the green today with SREI Infra Finance and JM Financial gaining the most. Shares of Indiabulls Housing Finance finished the trading day on an optimistic note (up 0.3%) after it was reported that the company is planning to raise Rs 3 billion by issuing Unsecured Non-Convertible Redeemable Debentures (Tier II) in the nature of subordinated debt on private placement basis.

The company proposes to issue 30,000 unsecured non- convertible redeemable debentures (Tier-II) in the nature of subordinated debt with a face value of Rs 100,000 each. The non-convertible redeemable debentures have a 10-year tenure with a 9.30% per annum coupon rate.

In a similar development, Housing Development Finance Corporation is planning to raise Rs 10.35 billion through issuance of debentures on a private placement basis in a bid to augment its long-term capital resources. The proceeds of the issue will be utilised for financing/refinancing the housing finance business (Subscription Required) requirements of the corporation. The debentures will carry a coupon rate of 8.5% per annum.

With equity markets losing sheen, investors have turned their focus towards fixed income products especially corporate non-convertible debentures. NCDs are rated instruments that come with a coupon slightly higher than fixed deposits (FDs). In one of our older articles in The 5 Minute Wrap Up, we explained why non-convertible debentures were a better investment alternative compared to FDs.

Moving on to news from oil & gas sector. According to The Economic Times, Indian Oil Corporation, Oil India, Bharat Petroleum and Oil Natural Gas Corporation (ONGC) hope to extract 10.5 million tonne of crude oil from Vankor oilfield as the oilfield reaches peak production level.

ONGC announced a deal to buy 15% stake in Vankor last year, and is in talks to raise that to 26%. This month, a consortium of Indian Oil Corporation, Oil India and Bharat Petroleum struck a deal to acquire 23.9% in Vankor.

Vankor oilfield is Russia's second largest oilfield and has an output of 21 million tonne a year. This is the same as ONGC's entire production from all its Indian fields. Rosneft had announced in March last year that Vankor's output would decline slightly from the plateau level of 22 million tonne a year.

Last week, Rosneft said the "achieved evaluation" of the Vankor project was US$3.3 per barrel of reserves. Recoverable reserves of Vankor, the largest field commissioned in Russia in the last 25 years, stood at 361 million tonne of oil and condensate and 138 bcm of gas as of January this year.

ONGC finished the day up by 0.2% on the BSE.

In another development, Aban Offshore finished the trading day up by 3.3% after the company announced that its arm has received order from ONGC for the deployment of the Drillship Aban Abraham for a firm period of two years. The expected revenues from this deployment is US$ 87 million.

Buying activity was seen across majority of the oil & gas stocks with HPCL and BPCL leading the gains.

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Jan 19, 2018 (Close)