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Indian Indices Continue Momentum; Energy Stocks Witness Buying
Tue, 3 Oct 11:30 am | Monish Vora, TM Team

After opening the day higher, stock markets in India have continued their momentum. Sectoral indices are trading on a positive note with stocks in the energy sector and consumer durables sector witnessing maximum buying interest.

The BSE Sensex is trading up 259 points (up 0.8%) and the NSE Nifty is trading up 80 points (up 0.8%). The BSE Mid Cap index is trading up by 1.1%, while the BSE Small Cap index is trading up by 1%. The rupee is trading at 65.58 to the US$.

In the news from IPO markets, SBI Life Insurance Company, whose Rs 84 billion IPO concluded recently, made a recent debut on bourses today. The company's share got listed at Rs 733 on the BSE, a premium of around 5% to its issue price of Rs 700.

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).

At the time of writing, SBI Life Insurance Company share price was trading up by around 4%.

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.

Also, speaking of IPOs, Indian Energy Exchange Ltd's (IEX's) initial public offering will be open for subscription from the 9th to 11th October, according to a draft red herring prospectus (DRHP) dated 26 September.

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The IPO will see a sale of 6.1 million equity shares by existing shareholders including Tata Power Co. Ltd, Aditya Birla Group's private equity arm, Madison India Capital and Multiples Alternate Asset Management Pvt Ltd. The shares are proposed to be listed on the BSE and National Stock Exchange.

Meanwhile, MAS Financial Services on Thursday said it has fixed a price band of Rs456-459 per share for its initial share sale offering, through which it is estimated to raise Rs 4.6 billion. The IPO will be open to public subscription from the 6th to 10th October.

Additionally, Godrej Agrovet Ltd., a diversified, research and development focused agri-business of the Godrej Group, plans to tap the capital market with an IPO to mobilise about Rs 11.6 billion.

The IPO comprises a fresh issue of shares aggregating up to Rs 2.9 billion by the company, an offer for sale by promoter Godrej Industries Ltd. aggregating up to Rs 3 billion, and up to 12.3 million equity shares by investor V-Sciences Investments Pte. Ltd of Temasek Holding that would total up to Rs 5.7 billion.

The issue will open on 4th October. The price band has been fixed between Rs 450 and Rs 460 per equity share of face value of Rs 10 each.

We'll soon review the above IPOs and release their recommendation notes. You can check the same on our IPO page.

Also, if you want to know more about IPOs and whether they are right for you, you can download the free special report - How to Get Rich with IPOs.

In the news from telecom sector, Reliance Communications (RCom) is witnessing selling pressure today. Shares of the company cracked over 9% today after the company called off its merger with Aircel and its tower due to delays caused by legal and regulatory uncertainties.

The company issued a statement saying that merger of mobile business of RCom and Aircel has lapsed with mutual consent. It stated that legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction.

Reliance Communications also blamed high level of competition as one of the reasons for termination of the merger talks.

Last year in September, RCom and Aircel had signed binding agreements for the merger of mobile business.

At the time of writing, Reliance Communications share price was trading down by around 6%.

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Mar 21, 2018 02:37 PM