MoD Approves Defence Purchases, Vedanta's Delisting, and Top Buzzing Stocks Today

Mon, 6 Jul Pre-Open

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Indian share markets ended on a positive note on Friday.

Benchmark indices edged higher as positive developments in a coronavirus vaccine trial improved global risk sentiment. Global stock markets were upbeat after a Covid-19 vaccine from Pfizer and Germany's BioNTech was found to be well tolerated in early-stage human trials.

Sentiment also got a boost after US non-farm payrolls released overnight beat expectations, raising optimism of a V shape recovery. This came as an addition to the recent PMI data from China which was also ahead of expectations and rather encouraging.

At the closing bell on Friday, the BSE Sensex stood higher by 178 points (up 0.5%). The NSE Nifty closed higher by 56 points (up 0.5%).

The BSE Mid Cap index ended up by 0.6%, while the BSE Small Cap index ended up by 0.5%.

On the sectoral front, gains were largely seen in the telecom sector and power sector.

Metal stocks on the other hand, witnessed selling pressure.

Speaking of the current stock market scenario, here's a look at how the broader largecap and smallcap indices have moved.

The markets are coming out of the deep fall.

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Top Stocks in Focus Today

Motherson Sumi Systems share price will be in focus today as the Board of Directors of the company have approved a group reorganisation plan.

It said the reorganisation is aimed at realigning interests of all its stakeholders creating a simplified corporate structure for growth of businesses across product portfolios within auto components space and allied operations.

Emami and Hindustan Unilever (HUL) will be among the buzzing stocks today.

HUL last week said it has renamed its popular skincare brand Fair & Lovely as 'Glow & Lovely' after dropping the word 'fair' from its name.

Earlier on June 25, HUL had announced dropping the word 'fair' from its popular skincare brand, citing its vision to adopt a holistic approach to beauty.

Meanwhile, Emami said it will consult legal experts over rival Hindustan Unilever's decision to rename its men's fairness cream brand as 'Glow & Handsome' that bears similarity to Emami's 'Fair & Handsome' brand of men's personal care products.

Market participants will also track Cadila Healthcare today as the company said its vaccine candidate for Covid-19 has received the permission from DGCI for human clinical trials.

In an exchange filing, the company said it has received the approval from Drug Controller General of India - Central Drugs Standard Control Organisation (DCGI-CDSCO) to initiate Phase I/II human clinical trials for its Covid-19 (plasmid DNA) vaccine.

The company has completed preclinical development and plans to begin the trials in July 2020.

Vedanta's Exit from Indices Ahead of its Delisting

Vedanta share price has been removed from all indices complied by the NSE ahead of its possible delisting.

The company is also part of the benchmark Nifty 50 index. The stock will be replaced by HDFC Life Insurance Company with effect from July 31.

It will be replaced by SBI Cards in the Nifty 100 and Nifty 500 indices.

NSE's index maintenance committee "has decided to replace Vedanta from various indices on account of proposed voluntary delisting. The changes shall become effective from July 31," the exchange said in a release.

Last week, Vedanta obtained shareholders' approval to delist. The company will soon launch the reserve book building process to delist.

Note that in the last two months, majority owners of Vedanta, Adani Power, and Hexaware Technologies have proposed buying out all publicly traded shares amid the coronavirus-induced sell-off in stocks.

It was also reported last month that Diageo is exploring options to delist United Spirits.

Enthusiasm to invest in shares of public companies that can go private matches a trend seen in Singapore in recent years.

According to the data from DBS Bank, the premium for privatizations and takeovers in the city-state averaged about 15% between 2017 and July 2019.

The strategy was earlier seen in India after the global financial crisis, and, in 2009, at least one local fund manager opened a fund to buy shares in companies seen to have a high likelihood of delisting.

We will keep you updated on the latest developments from this space. Stay tuned.

Defence Stocks Rally as MoD Approves Military Purchases

Stocks from the defense sector will be in focus today after the Ministry of Defence (MoD) last week approved the purchase of weapons and equipment worth Rs 389 billion.

The ministry said procurement from Russia and upgrade of MiG-29s would cost about Rs 74.2 billion, while Hindustan Aeronautics (HAL) would build the Sukhoi-30MKI fighters in Nashik for an estimated Rs 107.3 billion.

Shares of Hindustan Aeronautics rallied up to 10% on Friday on the back of the above news.

Meanwhile, Bharat Dynamics hit a 52-week high of Rs 378 on Friday. The stock has rallied about 29% in the ongoing week after the company's net profit more-than-doubled at Rs 3.1 billion in March quarter (Q4FY20) on the back of strong operational income.

In the month of May, the government had hiked foreign direct investment (FDI) via automatic route from 49% to 74% as part of reforms in the defence sector to boost the government's Make in India campaign.

Walchandnagar Industries, Bharat Electronics, Bharat Forge and other stocks engaged in the defence sector will also be in focus today.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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