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Of the Changes in NSE Indices, Wipro Buyback, and Top Cues to Watch Out Today
Thu, 31 Aug Pre-Open

Indian share markets ended yesterday's session on a firm note amid strong global markets as market participants shrugged off geopolitical tensions a day after North Korea fired a missile that flew over northern Japan.

At the closing bell, the BSE Sensex closed higher by 258 points and the NSE Nifty finished up 88 points. The S&P BSE Mid Cap finished up by 1.5% while & S&P BSE Small Cap too finished up by 1.3%.

Gains were largely seen in metal stocks, energy stocks, and realty stocks.

Top Stocks in Focus Today

Steel Authority of India (SAIL) share price is set to be in focus today as the company and Indian Railways have entered into a strategic agreement on Long Term Tariff Contract. The agreement will involve fifteen of the sixteen zones under Indian Railways for transportation of iron & steel and other related commodities. In terms of benchmark gross freight revenue and tonnage, this is poised to be the highest tariff contract of Indian Railways.

Stocks from the pharmaceuticals sector are also said to be in focus today. Investors will be keeping tabs on Cadila Healthcare share price. As per the news, Zydus Cadila has received establishment inspection report from the US health regulator for its manufacturing facility in Ahmedabad. The development signifies a successful closure of the US Food & Drug Administration (USFDA) audit for the abovementioned facility.

Market participants are also tracking Aurobindo pharma share price as news yesterday reported that the company is in talks to buy the Russia business of Mumbai-based Shreya Life Sciences Pvt. Ltd. As per an article in Livemint, the deal is potentially valued between US$ 80 million to US$ 100 million.

Indian Oil Corporation share price is also said to be in focus today. The stock of the company surged 3.6% yesterday after the company announced capital investments to the tune of Rs 320 billion over the next three to four years. To meet the rising demand for petrochemicals, especially plastics and polymers, the company will invest Rs 320 billion to ramp up its output by fiscal 2021.

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Banks Asked to Send RBI their List of Defaulters

In the news from banking space, the Reserve Bank of India (RBI) has asked banks to send at least 20 companies that have defaulted on their debts to bankruptcy court. The apex bank has asked to do so if the problems faced by these companies are not resolved by about mid-December.

The above development comes as another move by the RBI on its crackdown on bad loans.

Yesterday, the RBI had sent commercial banks a second list of at least 26 defaulters with which it wants creditors to start the process of debt resolution before initiating bankruptcy proceedings.

Reportedly, the defaulters' list comprises companies primarily in the power sector, telecom sector, steel sector and infrastructure sector. Videocon Industries Ltd and Jaiprakash Associates Ltd are the two large companies among the above list of 26 defaulters, accounting for over Rs 1 trillion of debt.

Cabinet Approves Levy on Luxury Cars

In the news from automobile sector, the Cabinet yesterday approved raising the maximum levy on large cars, luxury cars, and sports utility vehicles (SUVs). Accordingly, the Cabinet passed an executive order to raise the maximum levy to 25% from 15%, which could make large luxury cars and SUVs more expensive.

The time of implementation of the above increase will be decided by a panel of central and state finance chiefs.

Changes in NSE Indices

The National Stock Exchange (NSE) is said to make some changes in its benchmark indices from September 29th. As per an article in the Economic Times, NSE will include Bajaj Finance, Hindustan Petroleum Corporation and United Phosphorus into its benchmark Nifty 50 from September 29. These stocks will take the places of ACC, Bank of Baroda, Tata Power and Tata Motors DVR.

As per the NSE notification statement, the above replacements will also be applicable to Nifty50 Equal Weight Index.

The exchange has also made changed to the broader indices. In the Nifty 100, Divi's Laboratories and United Breweries have been excluded while Avenue Supermarts and MRF are to be included.

Wipro Gets Shareholders Nod for Share Buyback

In the news from IT space, Wipro has got shareholders nod for its share buyback.

The company has announced an Rs 110 billion buyback, proposing to buy back 343,750,000 equity shares at Rs 320 per share.

Speaking of share buybacks, many buybacks are set to hit a new record this financial year. As per Prime Database, in the first five months of FY18, at least twenty companies have offered to buy back shares worth Rs 480 billion.

As per Rahul Shah, co-head of Research, investors should not assume buybacks are always good. Here's an excerpt of what he wrote in a recent edition of The 5 Minute Wrapup:

  • The reason behind the buyback must be investigated. At the end of the day, an increase in earnings should be more a function of the inherent robustness of the business, as that's what will help it continue to grow at a healthy pace.

The topic also brings us to ask: Do buy-backs offer an arbitrage opportunity for retail investors? Ankit Shah has answered this question in a recent edition of Equitymaster Insider. You can access the issue here.

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

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Mar 16, 2018 (Close)