IRFC IPO, GAIL Share Buyback, and Buzzing Stocks Today

Mon, 18 Jan Pre-Open

   Momentum Moves   

   SGX Nifty   

   09:30 am   

   12:30 pm   

   Closing   

Indian share markets witnessed heavy selling pressure on Friday, pausing the record rally, with all sectors barring telecom reeling under pressure.

Benchmark indices fell tracking weak Asian markets despite announcement of US$ 1.9 trillion stimulus package proposal from US President elect Joe Biden.

At the closing bell on Friday, the BSE Sensex stood lower by 549 points. Meanwhile, the NSE Nifty ended down by 162 points.

Tech Mahindra and HCL Tech were among the top losers.

The BSE Mid Cap index ended down by 1.3%, and the BSE Small Cap index ended down by 1.1%.

On the sectoral front, IT stocks, realty stocks and oil & gas stocks were among the hardest hit.

Gold prices were trading up by 0.2% at Rs 49,289 per 10 grams at the time of closing stock market hours on Friday.

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5 Factors Why Sensex and Nifty Fell Over 1% on Friday

Weak Global Cues: Asian share markets tumbled in afternoon trade on Friday, reversing earlier gains as rising Covid-19 cases in China reinforced investor concerns over the prospects for a global economic recovery. Japan's Nikkei snapped a five-session rally, slipping from a more than 30-year high hit in the previous session.

European stocks were also trading on a cautious note as the prospect of tighter lockdowns in Germany and France as well as new Covid-19 restrictions in China cut into optimism about a global economic recovery.

All Sectoral Indices in Red: Barring telecom stocks, all sectoral indices witnessed huge selling pressure on Friday. IT and oil & gas stocks were among the hardest hit.

Profit Booking: Share market succumbed to profit-booking as valuations stand near-record high levels.

Our editors have been pointing out for many weeks now about the risky nature of the market as Covid-19 remains an overhang and the economic outlook remains uncertain.

Retail Prices Fall Sharply in December: India's consumer price index (CPI) inflation cooled in December 2020 as prices of kitchen staples eased, and would have been much lower but for a rise in retail prices of rice, pulses and cooking oil, latest data show.

The rise in CPI in December 2020 was the slowest since September 2019 and was also below the 6% mark for the first time since March 2020.

Falling Oil Prices: Crude oil prices fell on Friday as concerns about Chinese cities in lockdown due to coronavirus outbreaks tempered a rally driven by strong import data from the world's biggest crude importer and US plans for a large stimulus package.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Top Stocks in Focus Today

GAIL will be among the top buzzing stocks today.

Public sector utility GAIL announced share buyback of 6,97,56,641 equity shares at a price of Rs 150 for an aggregate consideration of Rs 10.46 billion.

The company's board also approved payment of interim dividend for the FY21 at Rs 2.50 per equity share on the paid-up equity share capital of the company.

The record date for dividend as well as for the purpose of share buyback has been fixed at 28 January 2021.

The government has asked at least eight state-owned companies to consider share buybacks as it scours for ways of raising funds to rein in its fiscal deficit.

The firms asked to consider share buybacks include miner Coal India, power utility NTPC, and minerals producer NMDC.

Tata Steel Long Products share price will also be in focus today as the company reported a consolidated net profit of Rs 3 billion for the quarter ended December (Q3FY21), on the back of strong operational performance. The Tata group company had posted a consolidated net loss of Rs 1.1 billion in the same period a year ago.

The company's revenue from operations grew 37% year-on-year (YoY) at Rs 13.6 billion as against Rs 9.9 billion in the corresponding quarter of the previous fiscal and its earnings before interest, taxes, depreciation, and amortization (EBITDA) margin stood at 30.1% for the quarter.

IPO Buzz: Indian Railway Finance Corporation (IRFC) IPO Opens Next Week

In latest developments from the IPO space, the Indian Railway Finance Corporation (IRFC) initial public offer (IPO) is scheduled to open today, becoming the first public issue of 2021.

The issue will close for subscription on January 20, 2021.

According to the red herring prospectus (RHP), the issue is of up to 1.8 billion shares, comprising a fresh issue of 594 million equity shares and an offer-for-sale of up to 1.2 billion crore shares. The price band of the issue is in the range of Rs 25-26 per share of face value of Rs 10 apiece.

The bids for the issue can be made for a minimum of 575 equity shares and in multiples thereafter. Up to 50% of the net issue will be reserved for the Qualified Institutional Buyers (QIB) while the company has reserved not more than 35% of the issue for the retail investors. However, 15% of the issue will be reserved for the non-Institutional category.

The dedicated market borrowing arm of the Indian Railways will utilise the net proceeds towards augmenting the company's equity capital base to meet future capital requirements arising out of growth in business and general corporate purposes.

The shares of IRFC are proposed to be listed on BSE and NSE. DAM Capital Advisors, HSBC Securities and Capital Markets (India) Private, ICICI Securities and SBI Capital Markets are the book running lead managers to the offer, while KFin Technologies Private Ltd will be the registrar to the issue.

How this IPO pans out remains to be seen.

Note that there are at least 15 companies that may come out with their initial public offerings in the year 2021. These include Kalyan Jewellers, Suryoday Small Finance Bank, ESAF Small Finance Bank, Indigo Paints, Brookfield India Real Estate Trust, Barbeque Nation Hospitality, Home First Finance Company and Railtel Corporation of India.

Among these, companies such as Indigo Paints, Home First Finance, Brookfield REIT and Railtel Corporation of India are expected to launch their IPO in January.

How the IPO market performs in 2021 remains to be seen.

We will keep you updated on all the developments from this space. Stay tuned.

MSCI to Raise Weight of Bharti Airtel in February Quarterly Index Review

Index provider MSCI last week said that Bharti Airtel will be a part of its February 2021 quarterly index review while the National Securities Depository (NSDL) has updated the foreign investment limit for the company to 100% from 49%.

"The proforma foreign ownership limit and upward movement of the adjustment factor due to the foreign room will be implemented as part of the upcoming February 2021 Quarterly Index Review," said MSCI.

The MSCI quarterly review will be announced on February 9 and will be effective from March 1.

In January 2020, Bharti Airtel had got approval from the Department of Telecommunications to increase its foreign investment limit to 100% of the paid-up capital. However, some of its subsidiaries were awaiting approvals. As a result, there was a weightage drop in MSCI index rebalancing in August 2020 which caused significant outflows.

Then on January 12, 2020, the company said it had received approvals for its relevant downstream investments and it was initiating the process to revise its foreign investment limit, as notified to its depositories, to 100% with immediate effect.

The revision of foreign investment limit is expected to lead to around US$ 700 million worth of inflow in Bharti Airtel due to increase in MSCI weightage.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

And to know what's moving the Indian stock markets today, check out the most recent share market updates 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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