Infosys Beats Street Estimates, Reliance Nippon Life IPO & Other Top Cues in Action Today

Wed, 25 Oct Pre-Open | Karan Janani, TM Team

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Indian share markets rose 100 points in the afternoon session to finish in green for second consecutive day. At the closing bell yesterday, the BSE Sensex closed higher by 101 points and the NSE Nifty finished up by 23 points. The S&P BSE Mid Cap finished up by 0.2% while S&P BSE Small Cap finished up by 0.6%. Gains were largely seen in PSU stocks, power stocks and energy stocks.

Results Corner

Infosys share price is expected to be in focus as the company reported a 7% QoQ growth in net profit at Rs 37.26 billion for the September quarter. The company had reported a net profit of Rs 34.83 billion in the June quarter. On YoY basis, profit rose 3.4%. The company has cut its FY18 revenue growth guidance to 5.5-6.5% in constant currency from 6.5-8.5%. It is expecting to grow at 6.5-7.5% in dollar terms based on the exchange rates as of September 30.

HDFC bank share price finished up by 0.2% in yesterday's trade. HDFC Bank Ltd reported a 20.1% jump in its September quarter net profit due to higher net interest income and other income. The bank reported a profit of Rs 41.51 billion up from Rs 34.55 billion a year ago.

Asian Paints share price is expected to see some action today as the company reported a 21% increase in its second-quarter profit. The company's September quarter consolidated net profit Rs 5.76 billion versus Rs 4.76 billion last year. Revenue from operations rose to Rs 42.74 billion versus Rs 41.79 billion last year.

Hindustan Unilever share price, IDFC Bank share price and Kotak Mahindra Bank share price is expected to see some momentum as the company declare their results during market hours today.

The results also come at a time when the economy has slowed to a more than three-year low due the lingering impact of a ban on high-value currency notes late last year and the rollout of a national goods and services tax.

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IPO Segment

Anil Ambani's Reliance Group firm Reliance Nippon Life opens its initial public offer (IPO) for subscription today. The public issue comprises fresh issuance of 2.45 crore shares, besides an offer for sale of 1.12 crore shares by Reliance Capital and 2.55 crore shares by Nippon Life Insurance Company.

Reliance Nippon Life Asset Management expects to raise Rs 15.42 billion through the IPO, with the company fixing a price band of Rs 247-252 per share. The IPO will open for subscription from October 25 to October 27.

In another development, as per a leading financial daily, India's state-run New India Assurance Co. Ltd has set a price band of Rs770-800 a share for its initial public offering (IPO) opening on 1 November. At the upper end of the price range, the IPO would raise Rs9,600. The sale will close on 3 November.

The IPO is part of the government's disinvestment program. So far in FY 18, the government has raised Rs 197.58 billion through disinvestment and strategic disinvestments of public sector enterprises as against its target of Rs 725 billion.

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.

Global Markets Stay Firm

Asian markets finished on a mixed note as the dollar edged down from three month highs. Japan's Nikkei 225 closed higher for the 16th straight session. Greater China markets were narrowly mixed. hina watchers will be paying close attention to the unveiling of the country's new leadership lineup expected today.

European markets remained mixed as market participants awaited the European Central Bank's upcoming policy meeting, where details on the central bank's plan to taper its quantitative easing program are expected. The ECB's meeting will conclude on Thursday.

Oil prices Remain Flat

Oil prices rose getting support from a decline in oil exports from OPEC's second-biggest producer Iraq and a projected extended fall in US commercial oil stocks.

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.

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