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Indian Indices Trade Near the Dotted Line
Fri, 23 Sep 11:30 am

After opening the day flat, the Indian indices have continued to trade near the dotted line. Sectoral indices are trading on a mixed note with stocks from the FMCG and banking sector witnessing maximum selling pressure. Oil & gas and realty stocks are trading in the green.

The BSE Sensex is trading down 9 points (down 0.04%) and the NSE Nifty is trading down 2 points (up 0.02%). The BSE Mid Cap index is trading up by 0.7%, while the BSE Small Cap index is trading up by 0.6%. The rupee is trading at 66.65 to the US$.

L&T Technology Services (LTTS) made a steady debut today by listing at Rs 920 per share. This was a 7% premium to its issue price of Rs 860 per share.

These are the kind of numbers that typically only come in when the IPO season is in full swing. Unlike winter and summer, the IPO season doesn't follow a yearly pattern. It comes when the markets are rising and investors are willing to pay up. Slightest sign of a weak market, and it is quick to go away too. And so does the hype around many of the stocks, especially the fundamentally weak ones.

IPOs have kept the Indian markets busy of late. Listing gains and over subscription of the issues have caught the eye of market participants. With this euphoria, there are many more IPOs lined up in the coming days. This begs the question: What should be one's approach towards IPOs?

As far as our views are concerned, one should not get swayed away by the buoyancy surrounding IPOs. Instead, what one should look for in IPOs is the fundamentals of the business and the attractiveness of valuations.

We at Equitymaster have always recommended IPOs cautiously. And Rahul Shah, co-head of research at Equitymaster, best explains our rationale behind this approach. As he wrote in one of the editions of The 5 Minute WrapUp... 'We know what a dirty game the IPO business is. We've seen it over and over again: It's a game where the odds are stacked against investors. So for us, the equation is simple. We'd rather face criticism in the short run than see our subscribers lose money over the longer term. We weren't afraid to do this during the hot IPO days of 2007, and we're not afraid to do it today.'

To know our views on the recent and upcoming IPOs, you can visit our IPO Buzz section (subscription required).

Last week we promised you a special handbook on IPO investing. The wait is finally over. Without further ado, we would like to present Equitymaster's Handbook of IPO Investing (with special focus on never before Insurance IPOs). Click here to get your free copy right away...

In another news update, there is no sign of consensus on the goods and services tax (GST) rate yet. As per a leading financial daily, the first meeting of the recently constituted GST Council failed to arrive at consensus on the GST rate on Thursday. The meeting on the issue will continue today.

However, on the positive side, there was a broad agreement that all pending issues including GST rates and legislative bills should be trashed out within two months. The agreement is aimed in order to clear these issues so that the new tax system could be introduced from April 1, 2017.

One must note that the government is keen to implement the GST regime from April 1. This is in order to ensure a smooth rollover to the changed tax structure from the beginning of the new fiscal and avoid mid-year alterations.

Early this month, the Union Finance Ministry notified the provisions of the Constitution Amendment Act that allows for setting up the Goods and Services Tax (GST) Council. A ministry notification stated that the Central Government appointed the 12th day of September, 2016 as the date on which the provisions of section 12 of the said Act shall come into force.

The formation of GST Council marks as a step forward in the implementation process of GST after President Pranab Mukherjee gave his assent to the Constitution Amendment Bill on Goods and Services Tax (GST). This, along with the bill ratified by more than 50% of the state assemblies, has made GST a law. To know more about GST, please read Vivek Kaul's report - GST & You: What the Media DID NOT TELL YOU About the GST.

Apart from the above macroeconomic trends, Vivek Kaul addresses a range of big issues in The Vivek Kaul Letter (subscription required). He's written on issues such as the government's handling of oil prices, the mess in public sector banks, the current state of India's real estate bubble...and a lot more!

In fact, as you read this, Vivek has just come out with a video that details all...including how these macro trends could impact you.

Click here to know more.

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

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