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Indian Indices Trade Marginally Lower
Tue, 20 Sep 11:30 am

After opening the day on a flat note, the Indian indices registered marginal losses. Sectoral indices are trading on a mixed note with stocks from the realty and telecom sector witnessing maximum selling pressure. Oil & gas stocks are, however, trading in the green.

The BSE Sensex is down 114 points (down 0.4%) and the NSE Nifty is down 33 points (down 0.4%). The BSE Mid Cap index is trading flat, while the BSE Small Cap index is trading down by 0.1%. The rupee is trading at 67.04 to the US$.

The US Fed is going to have a look at its money policy today. This comes as the Federal Open Market Committee (FOMC) is ready to commence its two-day monetary policy review today.

While the consensus is that the Fed will keep interest rates unchanged, the event is closely watched by market participants. Global financial markets have been witnessing volatility on the back of Fed's comments and anticipation for near-term rate hikes.

Global markets, during the last week, remained under pressure amid concerns regarding central bank policies, particularly the Fed. This was seen on anticipation of Fed becoming less accommodative in the future and the prospect of Fed increasing the interest rate sooner than expected.

Apart from the above cues, the markets have also been tracking the US data for jobs, manufacturing and services sector. While the manufacturing and services sectors remain constrained, sustained labour market strength could push the Fed closer to raising interest rates.

Also, apart from the Fed, the Bank of Japan (BOJ) and the European Central Bank (ECB) are also set to hold their monetary policy review this week. The decisions in these meetings will decide short term movements in markets this week. There could be volatility and Mr Market could once again seem irrational.

Moving on to the news from the IPO space in the domestic markets... The mega IPO of ICICI Prudential Life Insurance witnessed tepid response on the first day of the issue. This was seen as the IPO saw only 15.73% of the issue size of 13.23 crore shares getting subscribed till the end of Monday.

The IPO is recorded as the biggest IPOs since Coal India's stake sale in October 2010. It will also be the first pure play insurance company in India. ICICI Bank will raise Rs 60 billion by selling a stake in its subsidiary ICICI Prudential Life Insurance Company. The bank has valued the insurer at Rs 480 billion.

Here's Tanushree Banerjee, Equitymaster Co-Head of Research, writing about the IPO in a recent edition of the Research Digest (subscription required):

  • The IPO of ICICI Life Insurance not only has the lure if being a billion-dollar issue. But it will also be the first pure-play insurance company to be listed in India.

    Now, if you've seen the financial statements of banks and non-banking financial institutions, beware that insurance is a different animal altogether. What constitutes impressive financials and a strong balance sheet for insurance companies differs quite a bit from other financial entities.

    Valuing insurance businesses is going to be a novel experience indeed.

The insurer's parent ICICI Bank will be selling a 12.36% stake with this IPO. The issue will remain open until Wednesday. To know our view on the IPO, you can visit our IPO Buzz section (subscription required).

Apart from the above, many more companies are considering going public. So expect more action in the IPO markets going ahead. This begs the question: What should be one's approach towards IPOs?

A recent edition of The 5 Minute WrapUp - How to Profit from IPOs - answers this question. It offers two ways one can think about IPOs to profit from them.

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

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Nov 23, 2017 09:15 AM