CAMS IPO, AUM of Gold ETFs in 2019, and Top Cues in Focus Today

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

At the closing bell on Friday, the BSE Sensex stood higher by 147 points (up 0.4%) and the NSE Nifty closed higher by 40 points (up 0.3%).

Both, the BSE Mid Cap index and the BSE Small Cap index ended the day up by 0.4%.

On the sectoral front, gains were seen in the realty sector and metal sector. Telecom sector and consumer durables sector, on the other hand, witnessed selling.

Top Stocks in Focus Today

From the pharma sector, Lupin share price will be in focus today as the company got United States Food and Drug Administration (USFDA) nod for Famotidine.

The drug is used to decrease stomach acid production.

Dr Reddy's share price will also be in focus today as the company got USFDA nod for Nicotine Polacrilex Lozenges (2-4 Mg).

From the banking sector, market participants will also be tracking Yes Bank share price today. The stock of the lender witnessed selling pressure on Friday following reports of resignation on the company's independent director.

Uttam Prakash Agarwal submitted his resignation on Friday. Agarwal's tenure was to end in November 2023 but resigned on concerns over corporate governance.

CAMS Files DRHP for IPO

In the news from the IPO space, NSE-backed Computer Age Management Services (CAMS) has filed a draft red herring prospectus (DRHP) with Indian stock market regulator.

The initial public offering (IPO) size is estimated to be anywhere between Rs 15 to 16 billion.

The IPO will be an offer for sale (OFS) of 1,21,64,400 equity shares of face value Rs 10 each. The selling shareholders will include an affiliate of Warburg Pincus namely Great Terrain Investment, NSE Investments, Acsys Investments, HDFC and HDB Employees Welfare Trust.

The offer will have a 50% allocation to qualified institutional buyers, 15% to non-institutional investors and 35% to retail individual buyers.

A portion of up to 1.5% of the post-offer paid up equity share capital will be reserved for an eligible employee.

CAMS is the largest registrar and transfer agent for mutual funds. It offers integrated services for receipt, verification and processing of financial and non-financial transactions for the BFSI sector, largely to the mutual fund industry.

It also offers services such as payment, settlement and reconciliation, dividend processing, record keeping, report generation, intermediary empanelment and brokerage computation and compliance-related services via its proprietary technology platforms and application suites.

The AUM of equity mutual funds serviced by CAMS grew from Rs 2,180 billion in March 2015 to Rs 6,643 billion in March 2019, at 32.1% compounded annual growth rate (CAGR). The same stood at Rs 6,701 billion as of September 2019.

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

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.

Ankit Shah keeps a tab on all the IPOs and shares insights for his readers at Equitymaster Insider.

He's closely watching IPOs in 2020 and is going to pick all the profitable ones for his readers at Equitymaster Insider. In one of his recent articles, he has explained why keeping a tab on the IPO market is vital to your overall investing goals. You can read it here: What I Learnt from IPOs in 2019 (requires subscription).

Investors Place their Bets in Gold ETFs in 2019

Investors infused Rs 160 million in gold exchange-traded funds (ETFs) in 2019, after pulling out money from safe-haven assets in the last six years.

Data from the Association of Mutual Funds in India (AMFI) showed that asset under management (AUM) of gold funds surged 26% to Rs 57.7 billion at the end of December 2019 from Rs 45.7 billion at the end of December 2018.

As per Amfi data, investors put in a net sum of Rs 160 million in 14 gold-linked ETFs last year, while they pulled out Rs 5.7 billion in 2018.

The safe haven asset had witnessed an outflow of Rs 7.3 billion, Rs 9.4 billion, Rs 8.9 billion, Rs 16.5 billion and Rs 18.2 billion in 2017, 2016, 2015, 2014 and 2013, respectively.

Speaking of gold, how lucrative gold has been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

• In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment.

Meanwhile, Vijay Bhambwani talks about how gold has been relied upon by humankind for 3,000 years in one of his videos.

If you consider street inflation, your fixed deposits are giving negative yields. In times like these, Vijay considers gold as a safe haven asset.

Tune in to find out more...

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