Sensex Trades on a Volatile Note; Metals Stocks Top Losers

Thu, 2 Nov 01:30 pm | Prasheel Vartak, TM Team

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After opening the day in green, Share markets in India have remained rangebound and are presently trading flat. Sectoral indices are trading on a mixed note, with stocks in the pharma sector and stocks in the consumer durables sector witnessing maximum buying interest. While stocks in the metals sector are leading the losses.

The BSE Sensex is trading down by 20 points (down 0.1%) and the NSE Nifty is trading down by 9 points (down 0.1%). Meanwhile, the BSE Mid Cap index is trading up by 0.4%, while the BSE Small Cap index is trading up by 0.2%. The rupee is trading at 64.59 to the US$.

In news from stocks in the IPO space. According to an article in Livemint, Life Insurance Corporation of India (LIC) has put in a bid of US$ 1 billion (approx. Rs 65 billion) for shares of the New India Assurance Co. Ltd (NIA).

The initial public offering (IPO) of NIA was fully subscribed on day one itself on the back of this development.

The Rs 96 billion NIA IPO was subscribed by 1.04 times on the first day of the share sale itself. The IPO is the second largest this year after state-owned General Insurance Corp of India Ltd's (GIC Re) Rs 113 billion share sale.

The portion of shares reserved for institutional investors in the NIA IPO saw a subscription of 2.13 times on Wednesday, while those reserved for retail investors and high net-worth individuals (HNIs) were subscribed 2% or 0.02 time each.

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The NIA IPO includes a fresh issue of Rs 19.2 billion. NIA plans to use the proceeds from the fresh issue for augmenting its capital base to support growth and expansion of business, improving solvency margin and solvency ratio. The insurance firm has set a price band of Rs 770-800 for the IPO. The offer will close on 3 November and will see a total stake dilution of 14.3%.

To know our view on the NIA IPO, click here.

This is the second straight state-owned enterprise IPO, in which the largest insurance firm in the country has made a substantial bid.

Last month, LIC had bid for shares worth Rs 70-80 billion in the GIC Re IPO.

Centre Gets Cracking on Divestment

After three years of underachieving its disinvestment targets, the government is back with a bang. This time, it wants to focus on strategic stake sales of non-public sector units (PSUs) and areas where disinvestment has so far been poor. FY15-16 saw no disinvestment through this route.

The government, in an offer for sale, plans to sell a total of 96 million shares, which at the upper end of the price band will fetch Rs 76.8 billion.

NIA's initial share sale is part of the Union government's divestment plan, under which the Department of Investment and Public Asset Management (DIPAM) plans to sell government stakes in several central public-sector enterprises through various routes such as IPOs, offers for sale and strategic sales.

Moving on to news from stocks in the metals sector, Coal India share price is among the top gainers on the bourses today after the company reported production and offtake numbers for October 2017.

The state-owned miner achieved 93% of the targeted coal production at 46 million tonnes in October 2017. For the period April- October 2017, actual coal production was 95% of the targeted at 278 million tonnes.

Offtake figures were 100% for the month of October, while those for the period between April-October 2017 stood at 97%.

Meanwhile, the Odisha government slapped a penalty of Rs 201.7 billion on Coal India's subsidiary, Mahanadi Coalfields Ltd. (MCL) for flouting environment and mining plant norms.

The Odisha government issued a show cause notice on why the penalty should not be imposed on the company and has given 30 days for the miner to respond.

The Odisha government is also assessing forest norms violation in the state and the amount of penalty for it. Another penalty could likely be levied for it on the company.

At the time of writing, Coal India share price was trading up by 1.8%.

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