NSO's View on India's GDP Growth, Rising Gold Prices, and Top Cues in Focus Today

Thu, 9 Jan Pre-Open

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India share markets continued to trade in the red during closing hours yesterday and ended their day marginally lower.

At the closing bell yesterday, the BSE Sensex stood lower by 51 points (down 0.1%) and the NSE Nifty stood down by 27 points (down 0.2%).

The BSE Mid Cap index ended up 0.1%, while the BSE Small Cap index ended up by 0.2%.

Stocks in the capital goods sector and energy sector witnessed selling pressure, while telecom stocks were trading in the green.

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Top Stocks in Focus Today

From the pharma sector, Biocon share price will be in focus today as the company's subsidiary - Biocon Biologics India has received its board approval for primary equity investment by True North.

As per the terms of the proposed agreement, True North will invest Rs 5.4 billion in Biocon Biologics that will eventually translate to a 2.4% minority stake in the biosimilars business post all restructuring.

Post the completion of this transaction, Biocon will hold 96.07% stake in Biocon Biologics.

From the banking sector, Yes Bank share price will also be in focus today after the private sector lender announced it will hold a board meeting on Friday, January 10 to discuss fund raising.

NSO Pegs India's GDP Growth to an 11-Year Low

The national income released by the National Statistical Office (NSO) has pegged India's GDP growth to an 11-year low of 5% in the current fiscal, mainly due to poor showing by manufacturing and construction sectors.

As per the report, the manufacturing sector output growth will decelerate to 2% in 2019-20, down from 6.9% in the previous financial year.

Likewise, the construction sector growth is estimated at 3.2% as against 8.7% in 2018-19.

According to back series GDP data released by the government in November 2018, the previous low in economic growth was recorded at 3.1% in 2008-09.

The dismal performance for the fiscal was anticipated as the Gross Domestic Product (GDP) growth in the first quarter was 5% and 4.5% in the subsequent three-months period.

The Reserve Bank of India (RBI) had also lowered its forecast for the economic growth to 5% while announcing its bi-monthly monetary policy last month.

The macro-economic data is important as Finance Minister Nirmala Sitharaman would be using it for preparing Budget estimates for the next financial year. She is expected to present the Budget 2020-21 in Parliament on February 1.

The NSO data further revealed that deceleration in growth will also be witnessed in other key segments, like agriculture; electricity; gas and water supply; trade; hotel and transport sector; financial; real estate; and professional services.

Whereas, some sectors, including mining, public administration, and defence, showed minor improvement.

As per the advance estimates for 2019-20, the growth in real GDP during 2019-20 is estimated at 5% as compared to 6.8% in 2018-19.

Gold Hits Fresh Record High

India gold February futures hit a fresh record high yesterday tracking gains in international spot prices which surged past US$ 1,600 an ounce mark.

In the international markets, gold rose as much as 2% on Wednesday to vault over the US$ 1,600 ceiling for the first time in nearly seven years.

The rise in price was seen after Iran fired rockets at Iraqi airbase which hosts US forces that triggered risk-off sentiment.

The above attack came hours after the funeral of an Iranian commander whose killing in a US drone strike has raised fears of a wider conflict in the Middle-East.

How the price of yellow metal responds to the upcoming developments remains to be seen.

IPO Buzz: Shriram Properties Reduces IPO Size

In latest developments from the IPO space, Shriram Properties has reduced the size of its proposed initial public offering (IPO) to Rs 7.5 billion. The developer had planned to raise up to Rs 12.5 billion earlier.

The Bengaluru-based builder, part of the Shriram Group, had received approval from capital markets regulator to float an IPO in April 2018.

Reportedly, the company is planning to launch its IPO after the Union Budget in February.

Shriram Properties, which has projects largely in southern property markets such as Chennai and Bengaluru, has Rs 5.9 billion of debt, and will mainly use the proceeds of the share sale to pare its leverage level.

The developer plans to raise around Rs 2.5 billion through the primary market and the rest from the secondary market.

Reports state that the company has already got commitments of around Rs 4 billion from around nine investors. Shriram Properties currently has Tata Capital, TPG, Starwood Capital Group and Walton Street Capital as entity-level investors.

Note that the real estate sector has been going through a prolonged slowdown. This has impacted the residential segment the most and IPOs have largely been out of favour.

Mumbai-based Lodha Group, which got regulator's approval for an IPO in July 2018, decided not to launch the share sale till the overall market and real estate sector conditions turned conducive.

How this IPO sails through remains to be seen. We will keep you updated on all the developments.

Speaking of IPOs, note that the year 2019 didn't see much activity in the IPO market. Since the start of the year, there were 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.

So, unlike bull markets wherein selling shareholders do their best to squeeze the highest price, bear markets often offer fantastic opportunities to spot great companies and get onboard early on.

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

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