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Sensex Sheds Over 180 Points; PSU Banks Drag
Tue, 27 Jun 01:30 pm

After opening the day on a positive note, the share markets in India have slipped into the negative territory. Barring consumer durables stocks and FMCG stocks, all sectoral indices are trading in red, with stocks in the capital goods sector and PSU sector leading the losses.

The BSE Sensex is trading lower by 179 points (down 0.6%) while the NSE Nifty is trading lower by 70 points (down 0.7%). The BSE Mid Cap index is trading down by 0.9% and BSE Small Cap index is trading down by 1.2%. Gold prices, per 10 grams, are trading at Rs 28,583 levels. Silver price, per kilogram is trading at Rs 38,410 levels. Crude oil is trading at Rs 2,822 per barrel. The rupee is trading at 64.54 to the US$.

In the news from IPO space, market participants are tracking the IPO of AU Small Finance Bank that is going to open for subscription tomorrow, with a price band of Rs 355-358 per share.

Speaking of IPOs, primary markets 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.

Initial public offerings (IPOs) have been a hot topic of late. In the last fifteen days, we saw three IPOs - Eris Lifesciences, GTPL Hathway, and CDSL.

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We have reviewed each of them and have released their recommendation notes. You can check the same on their IPO page.

The Indian Energy Exchange (IEX) has also filed draft papers with the Securities and Exchange Board of India (SEBI) for its IPO. IEX is India's first power exchange providing automated trading platform for electricity and renewable energy certificates.

Once the IPO details are released, we will review it and publish our view. Meantime, if you want to know more about IPOs and whether they are right for you, you can download our free special report - How to Get Rich with IPOs.

In other news, as per an article in the Economic Times, the financial year in India could commence from January instead of April as the Centre appears set to make the historic transition to end the 150-year-old tradition.

Owing to the above development, the next Budget could be presented by the Centre in November this year. As per the news, the government is working on aligning the financial year with the calendar year after Prime Minister Narendra Modi pitched for a change.

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

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Jan 16, 2018 03:13 PM