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Declining Gold Imports, Developments in the IPO Space, and Top Cues in Focus Today
Fri, 3 Jan Pre-Open | Monish Vora, TM Team

Indian share markets ended their trading session on a positive note yesterday.

At the closing bell yesterday, the BSE Sensex stood higher by 318 points (up 0.8%) and the NSE Nifty closed higher by 100 points (up 0.8%).

The BSE Mid Cap index ended up by 1.2%, while the BSE Small Cap index ended the day up by 1.4%.

On the sectoral front, gains were seen in the power sector and IT sector. Auto sector and consumer durables sector, on the other hand, witnessed selling.

Top Stocks in Focus Today

From the automobiles sector, Tata Motors share price will be in focus today as the company has announced a decline of 12% in total domestic sales to 44,254 units in December versus 50,440 units in the domestic market in December 2018.

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The company's sales in the domestic & international market, for December 2019 also came lower at 46,903 vehicles, compared to 54,439 units during December 2018.

Total MHCVs sales in December including MHCV Truck, Buses and International Business stood at 9,657 units compared to 14,374 units last year.

The company's domestic sales of passenger vehicle also slipped by 10% at 12,785 units in December 2019 as compared to 14,260 units in the same month previous year.

From the pharma sector, Sun Pharma share price will also be in focus today as the company's plans to consolidate its subsidiaries have hit a roadblock after the National Company Law Tribunal (NCLT) rejected a proposal in which India's biggest drug-maker sought to demerge an overseas unit.

The company had approached the Ahmedabad bench of NCLT for an approval to transfer investment undertakings from Sun Pharma to its Netherlands-based wholly owned subsidiary.

IPO Buzz...

In the news from the IPO space, omni channel cloud communications service provider Route Mobile has received approval from capital market regulator to launch its initial public offering (IPO).

The offer comprises of a fresh issue worth Rs 2.4 billion and an offer for sale of Rs 3.6 billion by the promoters, Y Sandipkumar Gupta and Rajdipkumar Gupta.

ICICI Securities, Axis Capital, Edelweiss Financial Services, IDBI Capital Markets & Securities are book running lead managers to the issue.

In other news, as per an article in The Economic Times, Indian companies may mop up Rs 400-500 billion through the IPO route in 2020.

It would be nearly four times higher compared with the Rs 123.6 billion raised by 16 companies in 2019 on the main exchange boards, which was the lowest in five years.

Among the prominent IPOs that may hit in the first half of the new year are SBI Cards & Payment, UTI Asset Management Company, Burger King, Home First Finance, and Computer Age Management Services.

Note that the year 2019 hasn't seen much activity in the IPO market. Since the start of the year, there have been just 16 IPOs on the BSE main board.

Even the ones that hit the primary markets were mostly small to mid-sized IPOs. And no mega IPOs.

Very few companies come out with IPOs during bearish market conditions. So, when the IPO market is sluggish, you must take that as an indicator of market sentiment and liquidity conditions.

However, it is interesting to note that despite the tepid market conditions, most of the companies gave positive listing day gains.

In fact, if you had invested in each one of them and held them till now, your gains would have been even better.

Passenger Vehicle Sales Decline in 2019

Sales of passenger vehicles fell below the psychological 3-million mark in 2019, after crossing the figure for the first time in 2017.

India's top seven auto manufacturers reported dispatching 2.67 million passenger vehicles to dealerships in 2019, against 3.12 million the previous year.

The decline was led by the top brands that included Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, Honda and Toyota.

Passenger vehicle makers in India sold 14% fewer units in 2019 than in the previous year, as prospective customers deferred purchases in a year marked by a grinding slowdown, liquidity crisis and confusion over new emission norms.

Overall, passenger vehicle sales in December fell 6% from a year ago, even as automakers prepare for transition to Bharat Stage VI (BS-VI) emission norms.

Declining Gold Imports

According to the commerce ministry data, India's gold imports fell about 7% to US$ 20.57 billion during April-November period of the ongoing financial year.

Imports of the yellow metal stood at US$ 22.16 billion in the same period of 2018-19.

The decline in gold imports has helped in narrowing the country's trade deficit to US$ 106.84 billion during the eight-month period under review as against US$ 133.74 billion in the year-ago months.

Note that gold imports have been recording a negative growth since July this year. However, it grew about 5% to US$ 1.84 billion in October and 6.6% to US$ 2.94 billion in November.

India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tonne of gold annually.

To mitigate the negative impact of gold imports on trade deficit and current account deficit, the government increased the import duty on the metal to 12.5% from 10% in this year's Budget.

The country's gold imports dipped about 3% in value terms to US$ 32.8 billion in 2018-19.

The CAD narrowed to 0.9% of GDP or US$ 6.3 billion in July-September, 2019-20 from 2.9% or US$ 19 billion in same period last year.

How this trend pans out in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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Stock Market Updates

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Feb 18, 2020 03:37 PM