Of Rising Crude Oil Prices, FRDI Bill, and Other Top Cues in Focus Today

Thu, 28 Dec Pre-Open

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Indian share markets pared all earlier intraday gains yesterday to end the session on a negative note.

At the closing bell yesterday, the BSE Sensex closed lower by 99 points and the NSE Nifty finished lower by 41 points. The S&P BSE Mid Cap finished up by 0.3% while S&P BSE Small Cap finished up by 0.5%. Gains were largely seen in pharma sector, while oil & gas stocks and realty stocks witnessed selling pressure.

Top Stocks in Focus Today

From the telecom sector, Reliance Communications share price will be in focus today. The stock of the company has surged over 125% in the last six trading sessions after the company announced a Rs 390 billion debt resolution plan. The stock ended up by 34% on BSE yesterday.

From the pharma sector, market participants will be tracking Glenmark Pharma share price and Sun Pharma share price. Stock of Glenmark Pharma witnessed buying interest yesterday after it was granted final approval by the United States Food & Drug Administration (USFDA) for Norethindrone Acetate and Ethinyl Estradiol Tablets USP and Ferrous Fumarate Tablets, 1 mg/20 mcg.

As for Sun Pharma, the stock of the company traded near its 5-month high yesterday as the USFDA accepted the company's new drug application filed by its wholly owned subsidiary, for OTX-101 (cyclosporine A, ophthalmic solution) 0.09%. The stock climbed as much as 6.9% to Rs 578, highest since 27 July.

Market participants will also be tracking Jindal Steel & Power share price. The stock witnessed buying interest yesterday after the company said it has successfully completed a 250-tonne basic oxygen furnace (BOF), marking the completion of the company's 6 million tonnes per annum (MTPA) integrated steel project at Angul in Odisha.

Crude Oil Trades Near 2015 High

In the news from the commodity space, crude oil has continued its momentum this week as it is trading at its highest levels since mid-2015.

Most of the buying interest is seen as a pipeline run by Waha Oil Company that carries crude to Libya's Es Sider terminal exploded on Tuesday, reducing output by 70,000 to 100,000 barrels a day.

The above drop in supply led to optimism of easing glut and helped crude oil trade on a positive note. Futures in New York and London touched the highest levels in more than two years after reports of the explosion came through.

Note that crude oil prices have been on a rising trend this year. However, this is not good news from India's perspective.

As we wrote in a recent edition of The 5 Minute WrapUp...

• Fiscal revenues are at risk. Particularly if the government is forced to consider a cut in fuel excise duties due to a rally in oil prices. In recent times, a sharp jump in excise collections has helped indirect tax collections. Any risk to revenues and subsequent threat to the fiscal deficit target at 3.2% of GDP would require tighter spending cuts.
  
  Secondly, the impact on inflation needs to be monitored. This narrowing the central bank's scope for further rate cuts.

You can read the entire article here.

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.

Two Companies Join the 2018 IPO Pipeline

In the news form the IPO space, many companies are lined up to hit the primary markets in 2018.

Among these, Baring Private Equity Asia-promoted CMS Info Systems - India's largest cash management company - is likely to hit the IPO market in January to raise about Rs 13 billion. As per the news, Baring will dilute about 30% of its stake in the IPO.

CMS is the local market leader in cash management, based on the number of automated teller machines (ATMs) and retail pick-up points. It has a market share of 25.6%, based on the total number of ATMs in India, according to a Frost & Sullivan report cited in the offer document of the company.

Apart from that, Anmol Industries Ltd plans to list in 2018 and has begun work on an initial public offer (IPO). The company plans to file offer documents with the regulator soon.

The Kolkata based company has already appointed bankers for the process and plans to raise over Rs 10 billion through the offer, which would see the company valued at about Rs 40-50 billion.

IPOs are all the rage in the share markets these days. With new companies listing by the day, all with promises of superior returns.

Download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the ongoing IPO rush.

Concerns for FRDI Bill Continue

Market participants are tracking the Financial Resolution and Deposit Insurance (FRDI) Bill under Parliament's consideration. As per the news, the social media is worried about the bill in that it will put bank deposits at risk and that depositors' money would be used to recapitalize banks.

The one concerning clause in the bill causing concern is the provision for a 'bail in'. In essence, the bill empowers a distressed financial institution to utilise its own public deposits to set its house in order.

Presently, only Rs 0.1 million worth of bank fixed deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). What the FRDI Bill proposes is, to utilise deposits above the insurable limit of Rs 0.1 million by converting the funds into shares of the bank. In other words, the FRDI Bill is simply an extension of the DICGC Act and is not draconian as it is made out to be.

The bill overlooks the truth that the insurance cover for public deposits in India woefully low. The share of insured deposits has fallen drastically from 75% to less than one third in the last two decades.

Speaking of FRDI, Vivek Kaul, editor of Vivek Kaul's Diary, has recently shared his thoughts on the topic in a recent article. You can read the same here.

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

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