Sensex Down Over 320 Points; Metal Stocks Witness Losses

Mon, 25 Sep 11:30 am | Monish Vora, TM Team

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After opening the day in the red, Indian share markets continued to witness selling pressure on the back of North Korea tensions. Sectoral indices are trading on a negative note with stocks from the realty sector, capital goods sector and the metal sector witnessing maximum selling pressure.

The BSE Sensex is trading down 320 points (down 1%) and the NSE Nifty is trading down 106 points (down 1.1%). Meanwhile, the BSE Mid Cap index is trading down by 1.6%, while the BSE Small Cap index is trading down by 2.4%. The rupee is trading at 64.81 to the US$.

In the news from IPO space, Capacit'e Infraprojects, a Mumbai-based construction company, whose initial public offer (IPO) saw a whopping 186-times subscription, has listed its shares on the exchanges today.

Share of the company got listed at Rs 399 apiece today. This represents a premium of around 60% to its issue price of Rs 250 per share.

Apart from the above, the IPO of SBI Life Insurance got subscribed 3.57 times last week. As per the data, the portions reserved for institutional investors and retail investors were subscribed 12.5 times and 0.8 times, respectively, while the portion set aside for high-net-worth investors saw 70% subscription.

SBI Life Insurance Company Limited is one of the leading life insurance companies in India. The company is a joint venture between India's largest bank State Bank of India (SBI) and the leading global insurance company BNP Paribas Cardif. SBI owns 74% of the total capital and BNP Paribas Cardif the remaining 26%. To know more about the company, you can read our IPO note on SBI Life Insurance Company Ltd (requires subscription).

One shall note that insurance protection in India remains grossly inadequate. This explains the huge protection gap of US$ 8.5 trillion for the country as of 2014. As per a Swiss Re report, India's protection gap stood at a staggering 92% and was the highest among all countries in the Asia Pacific, as can be seen in the below chart.

Insurance Protection Deficient in India

What this means is that for US$ 100 of insurance protection required, the country had insurance protection of a mere US$ 8 as of 2014. This is abysmally inadequate with a large part of the population still bereft of protection coverage.

What this also means is that there remains a huge growth potential for the life insurance sector in India. As we wrote in a recent edition of The 5 Minute WrapUp...

• Undoubtedly, the life insurance sector has huge potential for growth. Additionally, factors such as increasing youth population, rapid urbanisation, expanding financial literacy, and higher government focus on financial inclusion and risk coverage will spur demand further for insurance products in the country.
  
  Therefore, with the stock markets buzzing, insurance companies are also making a beeline to capitalise on the IPO frenzy. After ICICI Prudential got listed last year, a number of both life and non-life insurance companies have lined up their IPOs this year.

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In other news, Shoppers Stop share price is witnessing buying interest today. This comes as the company recently announced that its board approved a proposal to sell 5% equity stake in the company for Rs 1.8 billion to Amazon NV Holdings LLC, the investment arm of the world's largest online retailer Amazon Inc.

As per the news, Amazon.com NV Investment Holdings, a foreign portfolio investor, will subscribe to about 43.95 lakh shares in Shoppers Stop at Rs 407.78 each on a preferential basis.

The above partnership will help Shoppers Stop tap non-metro markets and aid its performance.

At the time of writing, the share price of Shoppers Stop was trading up by around 16% on the BSE.

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

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