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GST Relief for SME's, Indian Energy Exchange IPO & Other Top Cues in Action Today
Mon, 9 Oct Pre-Open | Karan Janani, TM Team

Indian share markets continued to soar in the afternoon session and finished in green for a fifth session of gains in six. At the closing bell last week, the BSE Sensex closed higher by 222 points and the NSE Nifty finished up by 91 points. The S&P BSE Mid Cap finished up by 1% while S&P BSE Small Cap finished up by 0.7%. Gains were largely seen in metal stocks, oil & gas stocks and PSU stocks.

Top Stocks in Focus

Crompton greaves share price is expected to be in news today after it was reported that the company has submitted a bid for the acquisition of home appliances brand Kenstar from debt-laden Videocon Group. The Videocon group, which is struggling with a debt of over Rs 400 billion has been considering sale of its various assets over the past few years to bring down the debt.

Reliance Industries share price is expected to see some action today after the company signed agreements to sell all its interest in upstream Marcellus shale assets in north-eastern and central Pennsylvania for US$126 million. In 2010, RIL had bought a 60% stake in the assets for US$392 million.

In news from telecom sector, the Tata Group informed the government that it plans to shut its wireless business, bringing an end to its 21-year-old phone services venture. This will be one of the first big Tata units to be shut in the group's 149-year-old history. Tata Teleservices, which was set up in 1996 with landline operations, has had a checkered history. It launched CDMA operations in 2002, then adopted GSM in 2008 and received Rs 140 billion of investment from NTT Docomo, which eventually decided to exit the joint venture in 2014.

In news from media sector, Zee Entertainment Enterprises share price is in news as the company announced that it has entered into a definitive agreement to acquire 9X Media Pvt Ltd and its subsidiaries from New Silk Route and other shareholders for Rs 1.6 billion. The company continues with its strategy of expanding into regional markets and niche genres.

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GST Relief for SME's

The Goods and Services Tax (GST) Council finalised a slew of relaxation measures bringing significant relief to small and medium businesses and exporters. It also lowered GST rates for 27 items.

Rates on food items such as khakra, dried sliced mango, ICDS food packets, unbranded namkeen, and unbranded Ayurvedic medicine have been lowered to 5%, as have rates of waste paper, plastic and rubber e-waste. Similarly, the GST rate for job work services provided by Zaria workers, imitation jewellery, printing and food items has been cut to 5%.

Similarly, to lower the compliance burden on small and medium businesses, the threshold for the composition scheme has been increased to an annual turnover of Rs 10 million from the earlier Rs 7.5 million.

IPO Segment

Indian Energy Exchange's (IEX) IPO is all set to debut today. IEX is India's first power exchange, which provides automated trading platform for electricity and renewable energy certificates. IEX is coming out with an IPO of up to 60.65 lakh equity shares through an Offer for Sale (OFS) by the selling shareholders. The price band of the issue has been fixed at Rs 1,645-1,650 per equity share.

IEX was originally promoted by erstwhile Financial Technologies (63 Moons Technologies) and PTC India Financial Services in March 2007. Notably, both the original promoters currently do not hold any stake in IEX. It commands greater than 93.5% volume market share while PXIL accounts for the rest.

The market euphoria is something similar to what was seen in 2007-08. When everyone around you is clamoring to get a piece of the IPO pie, it makes sitting tight difficult. And, why should you sit tight when stocks like Avenue Supermart lets you pocket a cool 100% gain from day 1 of the listing?

History suggests that these cases are few and far between. More than 70% of the IPOs listed in 2007 and 2008 are in the red, even today when the Sensex is at an all-time high.

This allows us to stay on the fence when it comes to investing in IPOs. But it doesn't make sense to completely ignore this space. For every Reliance Power - like issue, there have been issues like Maruti, TCS, and Jubilant Foodworks Ltd (with returns over 4,000%, 1,000% and 500% respectively) that have created immense wealth for shareholders. A merit-based selection primarily including valuation, business, and management quality is the logical way to go about it.

US Markets Wobble

Markets in US closed mostly lower in last week's trade after data disclosed that the labour market experienced its first contraction in seven years.

The dollar briefly touched a 2-month high and Treasury prices fell as signs that wage growth might finally be taking hold amid heightened expectations that the Fed could raise interest rates in December.

Meanwhile, the US Treasury on Friday unveiled an array of sweeping reforms of capital markets in the US designed to boost market access and investment opportunities.

The proposals, which form part of President Donald Trump's plan to spur economic growth and reduce regulation, include efforts to roll back current regulations, many of which were imposed after the financial crisis of 2008.

Oil prices Remain Flat

Oil prices fell from last week's highs. The sentiments also remained negative as Tropical Storm Nate was forecast to hit the Gulf of Mexico coast as traders anticipate disruption to refineries.

Meanwhile, Saudi Arabia and OPEC are lobbying Russia to stay on board with their efforts to raise oil prices, amid signals that Moscow wants to end its participation in costly petroleum-production cuts.

To keep a tab on the movements in crude oil and other commodities, you can read the stock market commentary from the Daily Profit Hunter team. Their commentary tracks the developments in the global economy as well as stock, currency and commodity markets.

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 23, 2018 (Close)