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Sensex Recovers to Finish Flat; FMCG & Pharma Stocks Rally
Fri, 30 Jun Closing

Indian share markets trimmed its early losses in the afternoon session to finish just above the dotted line ahead of the launch of GST. At the closing bell, the BSE Sensex stood higher by 64 points, while the NSE Nifty finished up by 17 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 0.6% and 0.7% respectively. Gains were largely seen in pharma stocks, consumer durables stocks and FMCG stocks. On the other hand, Realty stocks and auto stocks fell.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.14%, while the Nikkei 225 & the Hang Seng fell 0.92% and 0.77% respectively. European markets are higher today with shares in France leading the region. The CAC 40 is up 0.45% while Germany's DAX is up 0.24% and London's FTSE 100 is up 0.03%.

The rupee was trading at Rs 64.73 against the US$ in the afternoon session. Oil prices were trading at US$ 45.27 at the time of writing.

CDSL share price rose 75% on debut, after its Rs 5.24 billion initial public offer (IPO) received a robust subscription of more than 170 times.

IPO Frenzy Continues

It's raining IPOs. Fund raising for the year has crossed Rs 100 billion mark. As per The Economic Times, at least fifty more companies are likely to come out with IPOs this year, raising between Rs 400 and Rs 600 billion. To put that in perspective, in 2007-08, 84 companies raised Rs 410 billion via IPOs.

A careful evaluation of each IPO on its merits - its fundamentals, and most importantly, valuations - is the only way to spot future multibaggers. To learn how to navigate the treacherous world of IPOs, do read our special report on finding money-spinning IPOs.

Meanwhile, Interglobe Aviation (Indigo) share price plunged 6% after the company has expressed unsolicited interest in Air India after the Union cabinet approved a proposal to privatize the state-owned airline.

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In news from telecom sector, as per a leading financial daily, domestic rating agency, ICRA in its latest report has said that Indian telecom sector's revenue are likely to fall by another 6% to Rs 2.4 trillion in the financial year 2017-18, mainly due to heightened competitive intensity and pricing pressures. It also cautioned that the plunge could be sharper for smaller operators like Tata Teleservices, Aircel and Reliance Communications.

In addition, the rating agency has said that the GST rollout will further add to the woes for sector as the higher tax incidence would have to be absorbed by them leading to some additional pressure on cash flows. It expects that industry debt to rise from 4.6 trillion in FY17 to Rs 4.8 trillion in FY18, despite efforts to lighten the balance sheets.

It noted that the pressure on cash flows on the one hand and the need for constant capex on the other, pose a challenge towards debt servicing.

According to the report, for FY18, non-spectrum debt is expected to be at Rs 3.1 trillion, while the spectrum debt is seen to be around Rs 1.7 trillion. Repayment burden for spectrum debt is likely to be Rs 253 billion per annum for the next two years and Rs 317 billion post that.

The report added that the impact on the telecom industry's financial health was visible in the second half of FY2017 post-RJio's launch. It also estimates the situation to remain weak during this fiscal as well, as the pricing pressures show no signs of reduction.

Telecom stocks finished mixed with Idea share price and AGC networks share price leading the gains.

Moving on to news from economic sector. After hitting a four-month low in the month of April, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) have surprisingly surged to a 7-month high of Rs 1.81 trillion at the end of May, despite stringent norms put in place by SEBI to curb inflow of illicit funds.

This was highest since October last year, when the cumulative value of such investments stood at Rs 1.99 trillion. The quantum of FPI investments via P-notes rose to 6.3% in May from 6% in the preceding month.

P-notes are issued by registered Foreign Portfolio Investors to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They however need to go through a proper due diligence process.

SEBI had tightened P-note norms by levying a fee of US$ 1,000 on each instrument and barred their issuance for speculative purposes to check any misuse for channelising black money.

At the same time, the capital markets regulator had decided to relax the entry norms for foreign portfolio investors willing to invest directly in Indian markets rather than through participatory notes. The new measures follow a slew of other steps taken by the regulator in the recent past.

In news from energy sector, Oil and Natural Gas Corporation (ONGC) has reportedly scrapped the initial agreements it signed with oilfield services providers Schlumberger and Halliburton.

In December, the company had signed agreements with Schlumberger and Halliburton for enhancement of production from its matured fields of Geleki in Assam and Kalol in Gujarat, respectively.

The board felt that the agreements could be challenged in future since there has been no open bidding for this. The company has now invited expression of interest from interested parties to enhance its production.

In another development, as per an article in The Financial Express, The Prime Minister's Office is firm on merging ONGC and HPCL.

The government is said to be planning to combine HPCL with ONGC by December this year by selling its 51.1% stake in the former to the latter for US$ 4.5 billion. The Ministry of Petroleum and Natural Gas is learnt to be in favor of adopting a subsidiary model for combining the two oil PSUs instead of merging the companies, making ONGC the parent company of HPCL.

ONGC share price finished down by 0.4% while HPCL share price finished up by 0.2% on the BSE.

And here's a note from Profit Hunter:

The merger of ABNuvo and Grasim fuelled rallies in both the stocks. But now Grasim Industries has formed an interesting pattern on its daily chart.

After the stock bottomed out at Rs 782 in November 2016, it rallied strongly to trade in an uptrend. It hit a 52-week high of Rs 1,218 in May. It then corrected for a while but again resumed its upmove.

Today, the stock hit a new 52-week high of Rs 1,267, but gave up most of its gains in the second half of the session. This formed a shooting star candlestick pattern on the daily chart, which indicates a short-term reversal top.

So will this pattern bring a correction or will the stock continue its current momentum? Let's wait and watch...

Grasim Industries Due For a Correction?
Grasim Industries Due For a Correction 

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Feb 26, 2021 (Close)