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Sensex Opens Marginally Up; M&M & Dr. Reddy's Top Gainers
Thu, 5 Oct 09:30 am | Rini Mehta, TM Team

Asian stock markets are trading mixed today with the Japan's Nikkei 225 up by 6 points. The China's Shanghai Composite and Hong Kong's market were closed for a public holiday. US stocks edged up to extend their run of record closing highs on Wednesday as data on the services sector added to signs of strength in the economy and prospects for earnings.

Back home, share markets in India have opened the day marginally higher after the Reserve Bank of India (RBI) held its policy rate steady near seven-year lows on Wednesday after inflation surged. The BSE Sensex is trading higher by 49 points while the NSE Nifty is trading higher by 10 points. The BSE Mid Cap and BSE Small Cap index opened the day on up by 0.4% & 0.5% respectively.

Except consumer durables stocks and oil & gas stocks, all sectoral indices have opened the day in green with stocks from realty sector and healthcare sector leading the pack of gainers. The rupee is trading at 65.29 to the US$.

Dr. Reddy's share price surged in the opening trade after it launched Sevelamer Carbonate tablets, 800 mg, a therapeutic equivalent generic version of Renvela (sevelamer carbonate) tablets, in the US market following approval by the US Food and Drug Administration (USFDA).

Automobile stocks are trading mixed today with Tata Motors DVR and Ashok Leyland being the most active stocks. As per an article in a leading financial daily, Mahindra & Mahindra has bagged a contract in the country's biggest tender for 10,000 electric cars after the company agreed to match the lowest bid quoted by Tata Motors.

Accordingly, the company will now be able to supply 150 eVerito sedans in the first phase of the tender while Tata Motors will supply the remaining 350 electric Tigors.

Reportedly, Tata Motors and M&M had emerged as the lowest and second lowest bidders respectively in the first phase.

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The PSU, a joint venture of the companies under the Ministry of Power, and the Government of India, had floated the tender to procure 10,000 electric vehicles to replace the existing fleet of petrol- and diesel-run vehicles being used by the central government and its agencies.

One shall note that, the government is pushing for a shift to electric vehicles across the country as a part of its plan to move to the cleaner fuel by 2030.

Rahul Shah, Co-head of Research, offered his views on electric vehicles segment recently. Here's an excerpt of what he wrote:

  • "If you think car companies are resisting this change, you will be surprised. Volvo, the Swedish/Chinese car company has announced it will only offer electric or hybrid vehicles by 2019.

    Mercedes is planning on launching two SUVs and two sedans as EVs by the end of this decade. Volkswagen has big electric plans too. It has set a goal of 30 new EVs and two to three million plug-in sales by 2025. MM, India's largest EV manufacturer, recently forged a partnership with Ford to work on electric cars."

So, how should you play this trend? What are the companies best positioned to extract the maximum mileage?

Stay tuned. Rahul Shah has got a close eye on this megatrend - and he doesn't plan to miss a thing.

M&M share price opened the day up by 1.7%.

Moving on to the news from the IPO space. General Insurance Corporation of India (GIC Re) has been valued at Rs 800 billion (considering the upper band for the issue) for its upcoming initial public offering (IPO).

The IPO is set to hit the markets on 11 October to 13 October. With a Rs 113.7 billion IPO (US$1.7 billion), this will be the second biggest in the country after Coal India (2010).

The IPO consists of a primary issue of 17.20 million equity shares by GIC Re and offer for sale of 107.50 million equity shares by the government. GIC Re is a government-owned reinsurance company. The price band for the issue is Rs 855 to Rs 912.

Undoubtedly, the 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.

Insurance Protection Deficient in India

But 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.

Our big-picture editor, Vivek Kaul, recently penned a pertinent report on entire insurance industry. We strongly recommend you go through the full report on what's really happening in the insurance industry in India...and how it affects you. If you have not accessed Vivek Kaul's Letter yet, sign up here.

By the way, we have also prepared a guide to help you understand the valuation of insurance businesses.

Meanwhile, the initial public offer of Godrej Agrovet was subscribed 52% on the first day of bidding on Wednesday. The IPO to raise around Rs 11.6 billion received bids for 9.4 million shares against the total issue size of 18 million shares.

On a separate note, Prataap Snacks whose initial share sale offer received robust investor demand last week, has listed its shares today. The Rs 4.8-billion IPO was oversubscribed 47.4 times during September 22-26.

To know more about the both companies, you can access our IPO note on the same in our IPO section.

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

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Mar 21, 2018 02:41 PM