India ends strong on global cues

Wed, 12 Jan Closing

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In a mirror image to yesterday's session, buying activity intensified as the day progressed and as a result, the indices have closed today's session on a very strong note. The BSE-Sensex edged higher by around 340 (up 1.8%) points today whereas NSE-Nifty closed with gains of around 110 points. The BSE Midcap and BSE Small cap indices have also been quite buoyant today, with both gaining more than 1% each. Around 3 stocks gained for every 1 stock that declined on the Sensex today.

Amongst global markets, most Asian indices closed strong today whereas Europe is also witnessing a good amount of strength currently. The rupee was trading at Rs 45 to the dollar at the time of writing.

Indian indices shrugged off below par IIP numbers and showed solidarity with other Asian and European markets, most of whom are having a strong outing today. The cheers seemed to have flown from the news that the European Union is discussing plans to expand the Euro 440 bn bailout fund for the troubled European nations. Should such a move fructify, it could give a new lease of life to the concerned nations and put life back into global markets as well. However, we doubt the longevity of such a move given that similar aid in the past has not achieved any meaningful results. Thus, today's rally does not really have strong legs to it we believe.

As per a leading daily, SBI and Bharti Airtel, titans in their respective fields are coming together to make banking available to the country's vast unbanked population. The two companies today entered into a JV that is believed to tap into the power of SBI's strengths in banking and Airtel's reach in mobile telephony so that banking services could be provided to millions of Indians in a cost effective manner. It should be noted that India's much improved mobile teledensity of 60% has opened up numerous opportunities for the banking as well as other industries to reach the nook and cranny of the country and take country's economic potential to an entirely different level. Hence, the birth of this JV is a potential game changer and more companies are likely to follow suit. Infact, even as we write this, news came to us that ICICI Bank, India's second largest lender has entered into a similar deal with Vodafone, one of India's largest telecom companies. Both SBI and Bharti closed quite strong today.

Looks like the already crowded IPO market is about to get even more crowded, provided of course, good sentiments make a comeback. It should be noted that in October last year, market regulator SEBI had given permission to life insurance companies to come out with an IPO. Apparently, insurance watchdog IRDA believes that it will be ready with the guidelines for the same by February next year. Non life insurance companies on the other hand will have to wait for a few more months as the process for them may take some additional time to complete. As far as life insurance companies are concerned, only those companies that have completed 10 years in India and where there have been profits at the bottomline level for three years are eligible. Already, companies like HDFC Standard life and Reliance Life have evinced interest. Given that capital is the need of the hour for most insurance companies in India given their high growth, don't be surprised if there is a flurry of IPOs in this space in the near future.