Sensex Zooms 450 Points in Opening Trade; Mindtree Up 5% Post Q3 Results

Tue, 19 Jan 09:30 am

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Asian share markets and US stock futures are trading higher today as investors awaited comments from Joe Biden's Treasury Secretary nominee Janet Yellen on US stimulus and the dollar.

The Hang Seng is trading up by 2.8% while the Nikkei is trading higher by 1.6%.

Back home, Indian share markets have opened on a strong note, following the trend on SGX Nifty.

Market participants are tracking Tata Communications share price and Ceat share price as these companies are scheduled to announce their December quarter earnings today.

The BSE Sensex is trading up by 432 points. Meanwhile, the NSE Nifty is trading higher by 121 points.

ONGC is among the top gainers today. HDFC Bank, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened up by 1.1%. The BSE Small Cap index is trading higher by 1.3%.

All sectoral indices are trading on a positive note with stocks in the realty sector and energy sector witnessing most of the buying interest.

The rupee is trading at 73.16 against the US$.

Gold prices are trading down by 0.1% at Rs 48,858 per 10 grams.

Meanwhile, silver prices are trading up by 0.4% at Rs 65,720 per kg.

Domestic gold and silver prices are mixed today, tracking flat global rates. In the previous session, gold had finished 0.4% higher, after hitting the lowest level in over a month, while silver had advanced 1%.

In global markets, gold rates today inched higher as traders awaited comments from Treasury Secretary nominee Janet Yellen on the dollar and stimulus.

Speaking of bullion, in one of his videos for Fast Profits Daily, Vijay Bhambwani talks about why he is more bullish on silver than gold, and why it's a great investment for 2021 and beyond.

Tune in to the video to find out more:

Speaking of the current stock market scenario, note that since the lows in March 2020, the smallcap index has gained more than 100%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rebound rally.

Have a look at the history of previous smallcap crashes and rebounds over the last two decades...

As you can see, every big fall in the smallcap index was followed by a sharp up move, a minimum gain 200%. Twice the rebounds were just shy of touching 300%.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

In latest developments from the IPO space, the public issue of Indian Railway Finance Corporation, the subsidiary of Indian Railways, was subscribed 64.7% on January 18, the first day of bidding.

The offer received bids for 808.9 million equity shares against an IPO size of over 1,248 million equity shares, the bidding data available on the exchanges showed.

The IPO size excluded the anchor book which already received a good response from investors. The company raised Rs 13.9 billion of its total issue size of Rs 46.3 billion, through the anchor book.

The retail investors remained strong in the primary as well as a secondary market. The portion set aside for them has subscribed 1.25 times on the first day itself, while the employee portion was subscribed 13.52 times.

The reserved portion of non-institutional investors saw a subscription of 9.18% and that of qualified institutional investors 0.01%.

The company has fixed Rs 25-26 per share as the price band for the issue, which will close on January 20.

To know more, you can read our IPO note on IRFC here: Indian Railway Finance Corporation IPO: Should You Apply? (requires subscription).

In news from the IT sector, Mindtree is among the top buzzing stocks today.

Mindtree on Monday reported a 65.7% rise in consolidated net profit to Rs 3.3 billion for the December 2020 quarter. The company had posted a net profit of Rs 1.97 billion in the corresponding period last year.

On a sequential basis, the company clocked 28.7% growth, backed by growth across verticals and robust margin expansion with a strong order book.

The Bengaluru-based company saw its revenue grow 3% to Rs 20.2 billion in the quarter under review from Rs 19.7 billion in the year-ago period.

In dollar terms, its net profit rose 59.3% to US$ 44.2 million, while revenue declined marginally to US$ 274.1 million in the December 2020 quarter over the year-ago period.

At the end of the December 2020 quarter, the company's active client base stood at 276, and eight new clients were added during the quarter, the company said in a filing.

Mindtree share price has opened the day up by 5.6%.

To know more, you can read Mindtree's Q3FY21 result analysis on our website.

Moving on to news from the finance sector, L&T Finance Holdings on Monday said its board has approved raising of up to Rs 30 billion through a rights issue.

The offer will open on 1 February and close on 15 February, the company said.

A rights issue is a fundraising tool to mobilize capital from existing shareholders of a company. Shares are generally offered at a discount to prevailing market price in a rights issue.

The lender has fixed a price of Rs 65 per equity share for the offer and an entitlement ratio at 17:74 (17 equity shares for every 74 shares held by the eligible equity shareholders of the company), as on the record date.

Note that banks and non-banking financial companies (NBFCs) have been raising funds to build capital buffers.

Mahindra & Mahindra Finance and Shriram Transport Finance have raised Rs 30.9 billion and Rs 15 billion through their respective rights issues.

Last week, L&T Finance Holdings reported a 51% decline in consolidated net profit at Rs 2.9 billion for the third quarter ended December 31, 2020, against Rs 5.9 billion in the corresponding period last year.

The company posted highest quarterly disbursements since Q1FY20, up by 51% QoQ.

Recently, a working committee set up by the Reserve Bank of India (RBI) released new proposals to review the ownership and corporate structure of private sector banks. The committee also suggested the conversion of large NBFCs into banks.

As per reports, the proposal are favourable to large NBFCs promoted by corporate houses like L&T Finance along with the likes of Bajaj Finance, Mahindra Finance, Aditya Birla Capital and others who may now look forward to converting to a universal bank.

How the above developments pan out remains to be seen. Meanwhile, we will keep you updated on the latest 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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