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Indian Indices Trade in Red; IPO Buzz, and Top Stocks in Action
Thu, 19 Jul Pre-Open

On Wednesday, share markets in India opened in green and went on to hit a new all-time high. However, selling during the day meant that the benchmark indices ended the day in red. The S&P BSE Midcap Index ended down by 1.3% while S&P BSE Small Cap Index ended down by 0.9%.

The BSE Sensex closed lower by 147 points to end the day at 36,373. While the NSE Nifty ended down by 28 points to end the day at 10,980.

Among BSE sectoral indices, metal stocks fell the most by 3.1% followed by stocks in the realty sector at 2.4.%. Tata Steel and Vedanta were among the top losers.

Top Stocks in Action

Zydus Cadila share price will be in focus today after the company received final approvals from the US Food and Drug Administrator (USFDA) to market four generic products in the United States.

The group now has 208 approvals and has so far filed over 330 abbreviated new drug applications (ANDAs) since the commencement of the filing process by the company.

Tata Motors share price is likely to be in focus today, after the company said it will hike prices of its passenger vehicles across models by up to 2.2% from August to offset increased input costs. Notably, Tata Motors

Domestic Air Traffic Continues Stellar Growth

In news from stocks in the aviation sector. According to data from the Directorate General of Civil Aviation (DGCA), domestic air traffic was up by over 18.4% in June, compared to the same month last year.

Indian carriers flew 11.3 million passengers in the past month, up from 9.6 million in June 2017,

All key scheduled carriers flew their planes with more than 80% seats full. SpiceJet maintained its pole position in terms of load factor at 93.3%, followed by GoAir at 88.6% with IndiGo not far behind at 88.3%

IndiGo remained the market leader, flying 41.3% of the industry passenger traffic. Jet Airways came in next with 15%, followed by national carrier Air India with 12.5%.

Air travel has recorded double-digit growth for 47 consecutive months, thanks to low fares, the addition of new flights/destinations, and overall growth in the economy.

What's foreseeable for India's aviation traffic in 2018 is some pressure on the back of the consistent rise in crude oil prices. Earlier this month, Brent crude oil briefly breached US$80 per barrel and touched its highest level since December 2014. Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth.

Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.

Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.

IPO Buzz

TCNS Clothing opened for subscription yesterday with a price band of Rs 714-716 per share.

Women's apparel maker TCNS Clothing Company raised over Rs 3.4 billion from the anchor investors, ahead of its IPO today. The firm sells its products under W, Aurelia and Wishful brands.

As on 30 September 2017, TCNS sold its products through 418 exclusive brand outlets, 1,305 large format store outlets and 1,361 multi-brand outlets in different parts of the country. It also sold products through six exclusive brand outlets in Nepal, Mauritius and Sri Lanka.

To know our view on the IPO of TCNS Clothing, you can read our entire IPO analysis here (subscription required).

Further, HDFC Asset Management Company, the country's second largest mutual fund firm, has fixed a price band of Rs 1,095-1,100 per share for its initial public offering. The IPO is estimated to garner Rs 28 billion.

The initial share sale offer will be open for public subscription from July 25 to 27.

HDFC AMC operates as a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments.

Reportedly, the proposed IPO will put up to 25.4 million equity shares of the fund house on sale, of which 8.6 million shares will be put up by HDFC and up to 16.8 million shares by Standard Life.

HDFC AMC is selling a 4.1% stake in the IPO, while Standard Life will offload 8%.

The IPO market is gearing up for a burst of activity, with at least 12 companies planning to raise more than Rs 170 billion over the next two months, after a quiet start to the June quarter.

Reportedly, the introduction of the new Indian accounting standards (IndAS) as one of the reasons why IPO-bound companies have not approached the market so far, this quarter.

All companies, including unlisted ones, having net worth of between Rs 2.5 billion and Rs 5 billion have to prepare their financial accounts for the year ended 31 March 2018 as per the IndAS accounting standards. Companies with net worth of Rs 5 billion or more had to implement the new standard a year earlier.

As per the reports, the pipeline in the June quarter will be very healthy. The market/IPO outlook continues to be strong and robust for the next two quarters if not the entire year.

Several major IPOs, including those of HDFC Asset Management Co. Ltd, microfinancier CreditAccess Grameen Ltd and women's apparel maker TCNS Clothing Co. Ltd, are set to hit the market this quarter.

Other companies that may launch their IPOs in the quarter include seafood exporters Devi Seafoods Ltd and Nekkanti Sea Foods Ltd. Both said they would decide on the timing of the launch after they get regulatory approval for their respective share sales.

With so many new IPOs hitting the market, it would be difficult to not get carried away.

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.

To know more, download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the 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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