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Sensex Opens Firm; Infosys Climbs After Nilekani's Return to Infosys
Mon, 28 Aug 09:30 am

Majority of Asian stock indices are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.77%, while the Hang Seng is up 0.55%. The Nikkei 225 is trading down by 0.11%. US stocks closed mostly higher Friday on new hopes for reform, with the Dow Jones industrial average notching its first weekly gain in the last three weeks.

Back home, share markets in India have opened the day on a positive note. The BSE Sensex is trading higher by 133 points while the NSE Nifty is trading higher by 40 points. The BSE Mid Cap and BSE Small Cap index opened the day up by 0.4% & 0.5% respectively.

Infosys share price surged 4% in the opening trade after the return of former CEO Nandan Nilekani as non-executive chairman. This gave the much-needed solace to stakeholders, who saw their morale shaken after the open tussle between the board and the founders last week. First, the sudden exit of MD and CEO Vishal Sikka and then resignations of the entire board, except two members.

Sectoral indices have opened the day on a mixed note with stocks from information technology sector and realty sector leading the pack of gainers. While, consumer durables stocks and energy stocks have opened the day in red. The rupee is trading at 64.07 to the US$.

Real Estate stocks opened the day on a mixed note with Ansal Housing and Unity infraprojects witnessing maximum buying interest. As per an article in a leading financial daily, DLF has entered into a joint venture (JV) with GIC to build rental assets in India after its promoters sold a 33.3% stake in the rental arm, DLF Cyber City Developers Ltd (DCCDL) to the Singapore sovereign wealth fund.

The partnership will enable sustainable, long-term growth of DCCDL's rental business and create an optimum structure for its rental business to improve efficiency, with long-term capital for growth of the portfolio.

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The overall transaction will fetch Rs 119 billion for DLF, including the stake sale to GIC, which will generate Rs 89 billion for Indian real estate developer. The remaining 30 billion will come from the buyback of compulsory convertible preference shares.

With this deal, DLF stake in the DCCDL will increase to 66.7% from 60% while GIC will have 33.3% stake.

Further, DLF expects an investment to the tune of Rs 130 billion into the company which will help it in reducing the debt of residential vertical significantly.

Reportedly, with an infusion of Rs 130 billion into DLF and expected receipt of Rs 15 billion from some other assets, the company's debt, excluding that of DCCDL, will come down sharply to Rs 60 billion from the current Rs 205 billion.

Going forward, whether this partnership will unlock embedded value in this portfolio and achieve scale and growth will be the key thing to watch out for.

DLF share price opened the day up by 0.2%.

Moving on to the news from IPO space. As per an article in Livemint, At least four companies are planning to go public to collectively raise upwards of Rs 20 billion in the month of September.

Reportedly, the companies that have firmed up initial share sale plans for the next month include online matchmaking company Matrimony.com Ltd, road developer Bharat Road Network Ltd (BRNL), electronics maker Dixon Technologies (India) Ltd and real estate services provider Capacit'e Infraprojects Ltd.

So far this year, 15 companies have raised Rs 125.9 billion through the IPO route. In 2015 and 2016, 47 companies raised a total of Rs40,107 crore through IPOs.

2017 Set to be Record Year for IPOs

While all of this seems exciting to say the least, remember that in a euphoria-filled market such as this one, a rising tide lifts all boats.

With so many new IPOs set to hit the market, it is prudent to be ready with a strategy to take advantage of the frenzy.

It's good to be very selective when investing in IPOs. Carefully analyse each company for its own merits and don't give in to the hype surrounding the public offering.

That's Ankit Shah's approach at Equitymaster Insider. He keeps a sharp eye on developments in the IPO space and keeps his readers up to date on the big-ticket IPOs.

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