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Sensex Trades in Green; Pharma Stocks Lead Gains
Tue, 10 Oct 01:30 pm | Prasheel Vartak, TM Team

After opening the day in green, share markets in India have continued the momentum and are currently trading marginally above the dotted line. Sectoral indices are trading on a mixed note with stocks in the IT sector and stocks in the power sector leading the gains. Stocks in the metals sector are trading in red.

The BSE Sensex is trading up by 95 points (up 0.3%), and the NSE Nifty is trading up by 30 points (up 0.3%). Meanwhile, the BSE Mid Cap index is trading up by 0.7%, while the BSE Small Cap index is trading up by 0.9%. The rupee is trading at 65.35 to the US$.

In news about the economy. In another hit to the country's GDP growth potential, the World Bank reduced India GDP growth forecast to 7% for 2017-18 from 7.2% earlier.

In the June quarter of 2017-18, the Indian economy decelerated to 5.7%, lowest since the economy grew at 5.3% in the March quarter of 2013-14. This meant that after remaining the world's fastest-growing region for eight consecutive quarters, South Asia has slipped to the third position behind East Asia and the Pacific regions, as India's economy slowed to its lowest level in 13 quarters.

The World Bank blamed disruptions caused by demonetisation and the implementation of the goods and services tax (GST) as reasons for the decline.

Further, the World Bank cautioned that the most substantial medium-term risks are associated with private investment recovery, which continues to face several domestic impediments such as corporate debt overhang, regulatory and policy challenges, and the risk of an imminent increase in US interest rates.

However, it maintained that the economy would claw back to grow to 7.4% by 2019-20.

Both the Asian Development Bank as well as the Organisation for Economic Cooperation and Development (OECD) had cut their growth projections for India to 7% and 6.7% respectively.

As we have been saying, GST is a much-needed economic reform. It should eventually expand India's narrow tax base and increase government revenues.

After this decline, the upcoming few quarters will be critical. Growth is expected to normalise as businesses start aligning themselves to the post-GST regime. But only growth will determine how well the Indian economy has adapted to GST.

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Moving on to news from stocks in the IPO space. MAS Financial Services Ltd's initial public offering (IPO) was subscribed 8.3 times on Tuesday, the final day of the share sale.

As of 12pm, the IPO received bids for 5,91,24,160 shares against the total issue size of 7,124,910 shares, according to data available with NSE. The Rs 4.6 billion IPO will close on 10 October.

MAS Financial is a Gujarat-based non-banking finance company (NBFC), primarily focused on middle and low-income customer segments. The company offers business and financing products such as micro-enterprise loans, small and medium enterprise loans, two-wheeler loans, commercial vehicle loans and housing loans.

Today is the final day for subscription, to know our view on the IPO, click here.

Meanwhile, Indian Energy Exchange (IEX) kicked off its IPO yesterday. The company has fixed a price band of Rs 1,645-1,650 per share for its public issue and will remain open from 9 to 11 October. It aims to raise about Rs 6 million through the share sale.

IEX is India's first power exchange, which provides automated trading platform for electricity and renewable energy certificates.

At the time of writing, the IPO was subscribed by about 25%. Is the IPO worth your attention? We have released a recommendation note for the IPO. You can find it here.

With multiple offerings lined up, it becomes difficult to evaluate and pick out the best opportunity, if any exists. Not all IPOs will have fortunes like the D-Mart IPO, as the IPO game is inherently rigged against the retail investor.

BSE IPO Index vis-a-vis Sensex

Note that the BSE IPO index has underperformed the Sensex over the past decade. Investors blindly following the IPO hype might have done better following the Sensex. Moreover, when the markets touch new highs, the frequency of new IPOs hitting the market increases. The valuations go through the roof. Promoters and private equity investors take advantage of this frenzy to offload their stake.

While it's necessary to be cautious on IPOs, you don't need to completely ignore them either. We don't need to back all the IPOs to get rich. But a few good IPOs could certainly become the multibagger in your portfolio in a few years.

We have come out with a special report titled, How to Get Rich with IPOs. It is a comprehensive report that aims to cut through all the hoopla surrounding IPOs. This guide will show you how to safely profit from the 2017 IPO rush.

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 02:39 PM