Sensex Opens Flat; SBI Life Insurance & Tech Mahindra Top Losers

Thu, 9 Sep 09:30 am

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Asian share markets are trading on a negative note today as Wall Street indices settled lower overnight.

The Hang Seng is down 1.6%, while the Shanghai Composite is trading on a flat note. Japan's Nikkei is down 0.7%.

In US stock markets, Wall Street ended lower on Wednesday, spooked by worries that the Delta coronavirus variant could blunt the economy's recovery and on uncertainty about when the Federal Reserve may pull back its accommodative policies.

The Dow Jones Industrial Average fell 0.2% while the Nasdaq Composite shed 0.6%.

Back home, Indian share markets have opened on a flat note, following the trend on SGX Nifty.

The BSE Sensex is trading down by 37 points. Meanwhile, the NSE Nifty is trading lower by 16 points.

Kotak Mahindra Bank and Bharti Airtel are among the top gainers today. M&M, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened down by 0.1%. The BSE Small Cap index is trading higher by 0.2%.

Sectoral indices are trading mixed with stocks in the telecom sector and metal sector witnessing buying interest.

Realty stocks and healthcare stocks, on the other hand, are trading in red.

Shares of Tejas Networks and Jain Irrigation hit their 52-week highs today.

The rupee is trading at 73.71 against the US$.

Gold prices are trading down by 0.3% at Rs 46,912 per 10 grams.

Meanwhile, silver prices are trading down by 0.4% at Rs 63,936 per kg.

Crude oil prices are down today, giving up some of the last session's gains although a decline in US Gulf of Mexico output following Hurricane Ida provided a floor under the market.

Speaking of the stock market, Brijesh Bhatia, Research Analyst at Fast Profits Report shares the best window for trading successfully, in his latest video for Fast Profits Daily.

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In news from the IPO space, education startup Byju's is in talks to raise between US$400 m to US$600 m and then accelerate plans for an initial public offering (IPO) next year.

As per a leading financial daily, Byju's could close the pre-IPO fundraising in a few weeks at a valuation of about US$21 bn. The fundraising is likely to be split between equity and debt.

Byju's is then aiming to file its initial IPO documents as early as the second quarter of next year. It had previously looked at a timeline of 12 to 24 months.

Bankers including Morgan Stanley, Citigroup Inc. and JPMorgan Chase & Co., are in talks for discussing valuations.

Investment bankers have also pitched alternatives such as an US IPO or a merger with a special purpose acquisition company, but people close to the matter said those options are less likely than a listing in India.

Byju's added 45 m students to its platform as the pandemic peaked in India last year and said in July it has more than 100 m users on the app. Around 6.5 m are paid subscribers and its annual renewal rate is 86%.

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

Moving on to news from the insurance sector, SBI Life Insurance is among the top buzzing stocks today.

The Canada Pension Plan Investment Board (CPPIB) is planning to offload 2% stake in SBI Life Insurance today.

The shares will be offered in the range between Rs 1,159 and Rs 1,220 per share.

At the upper price, this share sale will fetch CPPIB Rs 24.4 bn.

As per the terms, if the demand is strong, CPPIB has the option to sell its entire holding. Currently, the Canadian investment manager holds 2.86% stake in the life insurance company.

BNP Paribas is the investment bank handling the share sale.

CPPIB had bought 2.24 m shares of SBI Life during its IPO four years ago. At that time, the shares were priced at Rs 700 per share.

Later in March 2019, the investment firm acquired 20 m more shares at Rs 578 from BNP Paribas Cardif, a co-promoter in SBI Life.

Earlier in August, American private equity fund CA Emerald Investments, an affiliate of Carlyle Asia Partners, sold its entire 1.9% stake in SBI Life worth Rs 21.5 bn at Rs 1,130 per share.

At present, State Bank of India (SBI) holds 55.5% stake in SBI Life, while BNP Paribas owns 0.2%.

To know more, check out SBI Life's latest shareholding pattern.

In other news, the life insurance industry grew by nearly 3% in the month of August. Private insurers did well.

Private sector life insurance companies saw their premium growing by 21% in August on a year-on-year (YoY) basis.

In terms of outperformers, SBI Life's August premium grew by about 24% YoY, and 74% when compared to an average of the first four months of fiscal 2022. Its retail APE also grew by nearly 67% YoY.

Another company which outperformed was ICICI Prudential Life. The August premium grew by 43% YoY and 37.5% when compared to the average of the first four months of fiscal 2022.

For HDFC Life Insurance, the month of August was muted. Its premium was down nearly 6%.

Speaking of the insurance sector, have a look at the chart below which shows the investment assets of non-life insurers and life insurers over the past 10 years:

Investment Assets of Non-Life Insurers 11x That of Life Insurers

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, the above chart is enough proof of how big an earning opportunity is the zero-cost float to the non-life insurers. Their investment assets under management is nearly 11 times that of life insurers.

Back in April 2021, Tanushree recommended a high-quality stock from this space. Subscribers can read the report here (requires subscription).

And if you are not a StockSelect subscriber, here's where you can sign up.

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