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Indian Indices Trade Strong; Capital Goods Stocks Lead Gains
Tue, 16 Oct 12:30 pm | Monish Vora, TM Team

After opening the day in green, share markets in India have continued the momentum and are presently trading above the dotted line. All sectoral indices are trading in green stocks in the capital goods sector and stocks in the bank sector leading the gains.

The BSE Sensex is up by 198 points (up 0.6%) and the NSE Nifty is trading up by 50 points (up 0.5%). Meanwhile, the BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 1.2%. The rupee is trading at 73.88 to the US$.

In news from the IPO space. Emami Cement has filed with capital markets regulator to raise Rs 10 billion through an initial public offering (IPO).

The IPO comprises fresh issuance of shares worth Rs 5 billion, besides, an offer of sale of the same size by the company's existing promoters and shareholders, according to the draft red herring prospectus (DRHP).

The company said net proceeds raised through the issue will be used for re-payment of certain indebtedness and for other general corporate purposes.

Emami Cement established an installed manufacturing capacity of 5.60 million metric tonne per annum (MMTPA) in its two years of commercial operations.

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The company said it currently operates three manufacturing plants and is in the process of setting up another plant, which subject to receipt of necessary approvals, is expected to result in an aggregate installed capacity of 9.30 MMTPA of cement and 3.2 MMTPA of clinker by April 2019.

The shares of the company will be listed on both the BSE and NSE.

Speaking of IPOs, what if one had invested in all the IPOs? How have the IPOs performed in 2017? And, have they outperformed the indices?

IPOs Underperform Broad Market Indices

According to an article in Business Standard, an investor who bet on the 33 IPOs of 2017 (on a weighted average basis) has seen the value of investment rise by 17%. However, compared to broad market indices, the underperformance is a bitter disappointment.

The above chart clearly shows the underperformance of IPOs.

What is the reason for this underperformance?

One of the key reasons IPOs have touched the altitude is due to a surge in the Indian equity market backed by liquidity and increasing investor demand for financial assets. Private equity investors and promoters took advantage of the absurd demand and came out with sky-rocket valuations. This is what we call a valuation bubble in the IPO market.

In our previous edition, we categorically stated:

  • "With greed hypnotising most folks, it is time for retail investors to exercise caution. While this does not mean that you should avoid IPOs lock, stock, and barrel; just ensure you do not end up paying higher valuations for a company that is yet to establish its worth".

During such times, it is imperative to be critically selective when investing in IPOs. Carefully analyse each company for its own merits and don't give in to the hype surrounding the public offering.

To know how to safely profit from the IPO rush, download this FREE report now and discover How to Get Rich with IPOs.

Moving on to news from stocks in the IT sector. An IT advocacy group representing more than 1,000 small IT companies mostly run by Indian-Americans has filed a lawsuit against the US immigration agency for issuing H-1B visas for shorter than three years durations.

The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise. The technology companies depend on it to hire tens of thousands of employees each year from countries like India and China. These visas are typically issued for three to six years to employers to hire a foreign worker.

Back in February this year, the Trump administration announced a new policy that makes very tough the procedure of issuing H-1B visas to those to be employed at one or more third-party worksites.

Under the new policy, the company would have to go an extra length to prove that its H-1B employee at a third-party worksite has specific and non-qualifying speculative assignments in speciality occupation

Indian IT companies, which are among the major beneficiaries of H-1B visas, have a significant number of its employees deployed at third-party worksites.

Companies seeking H-1B visas for their employees working at a third-party site, now have an intensive paperwork to file before submitting their applications. This has added to the compliance and operational costs of India's IT companies catering to the US market.

At the time of writing, BSE IT Index was trading up by 0.5%.

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

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Stock Market Updates

The BSE OIL & GAS Index Down 2% ; HPCL Among Top Losers (Today's Market)

Nov 12, 2018 03:33 PM

The BSE OIL & GAS Index Down at 13,635 (down 2.1%). Among the top losers in the BSE OIL & GAS Index today are HPCL, IOC and PETRONET LNG. Meanwhile, the BSE Sensex has plunged 1.1% to 35,333.

ORIENT CEMENT Plunges by 5%; BSE 500 Index Down 1.1% (Today's Market)

Nov 12, 2018 03:29 PM

ORIENT CEMENT share price has plunged by 5% and its current market price is Rs 92. The BSE 500 is down by 1.1%. The top gainers in the BSE 500 Index are WOCKHARDT LTD. (up 8.6%) and BALRAMPUR CHINI (up 7.9%). The top losers are ORIENT CEMENT (down 5.2%) and KAVERI SEED (down 5.0%).

IOC Plunges by 5%; BSE OIL & GAS Index Down 2.0% (Today's Market)

Nov 12, 2018 03:23 PM

IOC share price has plunged by 5% and its current market price is Rs 142. The BSE OIL & GAS is down by 2.0%. The top gainers in the BSE OIL & GAS Index is INDRAPRASTHA GAS (up 0.5%). The top losers are IOC (down 5.1%) and HPCL (down 6.4%).

BANK OF INDIA Plunges by 5%; BSE BANKEX Index Down 0.9% (Today's Market)

Nov 12, 2018 03:23 PM

BANK OF INDIA share price has plunged by 5% and its current market price is Rs 93. The BSE BANKEX is down by 0.9%. The top gainers in the BSE BANKEX Index is KOTAK MAH. BANK (up 1.2%). The top losers is BANK OF INDIA (down 5.2%).

The BSE POWER Index Down 2% ; GMR INFRA Among Top Losers (Today's Market)

Nov 12, 2018 03:21 PM

The BSE POWER Index Down at 1,991 (down 2.0%). Among the top losers in the BSE POWER Index today are GMR INFRA, SIEMENS and TORRENT POWER LTD. Meanwhile, the BSE Sensex has plunged 0.9% to 35,333.

Indian Share Markets Trade Flat; Realty & Power Stocks Lose (Today's Market)

Nov 12, 2018 12:30 pm

The BSE Sensex is trading down by 57 points, while the NSE Nifty is trading down by 10 points.

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