Sensex Reclaims 32,000-Mark in the Opening Trade; Tata Steel Surges 4.2%

Tue, 12 Sep 09:30 am

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Stock markets across Asia are mostly trading in green after a strong rally on Wall Street in overnight trade. The Japan's Nikkei 225 is up 0.98%. The China's Shanghai Composite added 0.04% and Hong Kong's Hang Seng is trading with marginal losses. The US stocks started the week on a positive note and ended the session with solid gains with the benchmark S&P 500 ending the session at an all-time high.

Back home, share markets in India have opened the day on a positive note tracking Asian peers. Investors are breathing a sigh of relief as North Korean fears eased slightly. The BSE Sensex is trading higher by 122 points while the NSE Nifty is trading higher by 33 points. The BSE Mid Cap and BSE Small Cap index opened the day up by 0.5% & 0.7% respectively.

All sectoral indices have opened the day in green with stocks from metal sector and realty sector witnessing maximum buying interest. The rupee is trading at 63.89 to the US$.

Steel stocks opened the day on a mixed note with Tata Steel & Adhunik Metaliks are the most active stocks on BSE. As per an article in a leading financial daily, a deal to merge the European steel operations of Tata Steel and ThyssenKrupp could be struck this month, after Tata removed a significant obstacle by offloading its UK retirement fund.

Tata Steel had earlier announced that Britain's pensions regulator has approved a regulated apportionment arrangement (RAA) in respect of the British Steel Pension Scheme (BSPS).

Estimated to be worth 15 billion British pounds, the pension fund threatened to drag the company into insolvency, making it less attractive to a potential buyer of its assets.

As part of the RAA, a payment of 550 million pounds from Tata Steel UK has been made to the BSPS and shares in Tata Steel UK, equivalent to a 33% of economic equity stake in the company, issued to the BSPS Trustee.

Reportedly, both the groups are now close to a memorandum of understanding, paving the way for a detailed look at one another's books and detailed negotiations.

One shall note that, a merger would create Europe's second-largest steelmaker behind only ArcelorMittal and represent a major consolidation move in a sector plagued by overcapacity.

Tata Steel share price began trading up by 4.2% in the opening trade on BSE.

Moving on to the news from aviation sector... As per an article in Livemint, InterGlobe Aviation Ltd., which operates IndiGo airlines, announced an institutional share sale of 33.6 million equity shares to reduce promoter holding and meet minimum public shareholding norms.

The qualified institutional placement (QIP) will include a fresh issue of 22.4 million shares, and an offer for sale of 11.2 million shares by certain promoter entities.

At its Monday closing share price of Rs 1,220.30, the sale could be worth around Rs 40,975 million. The fresh issue of shares could fetch the company around Rs 27,317 million.

According to the rules, companies need to ensure minimum public shareholding of 25% within three years of listing. InterGlobe has to reduce its promoters' holding from 85% to 75% to meet the regulatory norm.

Speaking of QIP route of equity raising, QIPs tend to be a faster way to raise capital as the dealing happens with a few investors - only institutions in this case. And this is why companies prefer this route - because of its convenience and fewer resource requirements compared to other methods of raising equity.

QIPs Poised to Scale Fresh Peak in 2017

Interestingly, QIPs are set to touch a record high in 2017. Since the beginning of 2017, QIPs have crossed Rs 340 billion.

Buoyancy in the market and positive sentiment towards primary issuances are giving confidence to companies and investment bankers to push ahead with their capital-raising plans.

With 17 offerings raising a little over Rs 340 billion in just seven months, fundraising through institutional placements will surpass the QIP record of Rs 346.7 billion set in 2009.

Indigo share price opened the day on a flat note.

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