Sensex Opens Higher; Metal and IT Stocks Lead

Wed, 20 Jan 09:30 am

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Asian share markets are trading on a mixed note today. The Nikkei is trading lower by 0.5% and the Hang Seng is trading up by 0.2%.

In US, Wall Street's main indexes rose on Tuesday as US treasury secretary nominee Janet Yellen advocated for a hefty fiscal relief package before lawmakers to help the world's largest economy ride out a pandemic-driven slump.

The Dow Jones Industrial Average rose 116 points, or 0.4% while the Nasdaq Composite added 199 points, or 1.5%.

Back home, Indian share markets have opened on a positive note.

A total of 36 companies including Bajaj Finance, Bajaj Finserv, HDFC Asset Management Company, and Havells India are set to announce their quarterly results today.

The BSE Sensex is trading up by 179 points. Meanwhile, the NSE Nifty is trading higher by 56 points.

Tech Mahindra is among the top gainers today. Power Grid, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened up by 0.5%. The BSE Small Cap index is trading higher by 0.6%.

Sectoral indices are trading on a mixed note with stocks in the metal sector and IT sector witnessing buying interest. Telecom stocks are trading in red.

Shares of Radico Khaitan and IDFC First Bank hit their 52-week highs today.

The rupee is trading at 73.13 against the US$.

Gold prices are trading up by 0.3% at Rs 49,119 per 10 grams.

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Speaking of the current stock market scenario, in her latest video, Co-head of Research at Equitymaster, Tanushree Banerjee lays down the steps that could help you reset your portfolio for a profitable 2021.

This is first time in 25 years that a benchmark index in India, the BSE Sensex, is trading at a P/E multiple of 40x. The last time the Sensex breached this multiple in October 1994.

Most investors are worried about parking money in safe stocks or safe asset classes. But are they making the right choices?

Tune in to the video to find out more:

In news from the IPO space, the initial public offer of Indian Railway Finance Corporation (IRFC) was subscribed 1.22 times on the second day of subscription on Tuesday.

The IPO received bids for 1,526 million equity shares against offer size of over 1,248 million equity shares (excluding anchor book portion), the subscription data available on the exchanges showed.

The category reserved for non-institutional investors was subscribed 24% and retail individual investors (RIIs) 2.33 times.

Price range for the offer has been fixed at Rs 25-26 per share.

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

In other news, the IPO of Indigo Paints will open for public subscription today. The price band has been fixed at Rs 1,488-1,490 per share for the initial share sale.

At the upper end of the price band, the public issue is expected to fetch Rs 11.7 billion, which comprises Rs 3 billion through fresh issuance of shares and Rs 8.7 billion through offer for sale (OFS).

Half of the issue is reserved for qualified institutional buyers, 35% for retail investors, 15% for non-institutional bidders and there is a reservation of up to 70,000 equity shares for subscription for employees, who will get a discount of Rs 148 per equity share to the offer price.

How the above IPOs sail through remains to be seen.

In news from the banking sector, HDFC Bank has submitted a plan to the Reserve Bank of India (RBI) outlining remedies for repeated glitches in the bank's technology platform over the past three years.

People aware of the matter said that the lender is awaiting a response from the regulator on when restrictions imposed in December on new card acquisition will be lifted.

The bank is working on multiple immediate and long-term solutions as part of its internal review. "The action plan that the bank is working on could take anywhere between 10-12 weeks to implement," said one of the persons. "From there on, it's up to the regulator to inspect the progress and take a call on lifting sanctions."

HDFC Bank, which issues nearly 150,000 credit cards a month, was directed by the regulator to stop doing so on December 12 until it had sorted out the problems. The bank also couldn't launch any new digital initiatives.

CEO Sashidhar Jagdishan had apologised to customers for the disruptions and asked them to continue transacting with the bank.

The RBI's move was a blow to the bank's ambition to expand its digital payments business, where it commands a 40% market share. HDFC Bank is a systemically important lender with a 10% share of the loans market and 26% of the credit card business.

The bank grew its credit card business by 32% sequentially in the December quarter.

HDFC Bank share price has opened the day down by 0.5%.

Note that, HDFC Bank is one that has always adapted to changing times.

HDFC Bank wanted to transform itself from a leader in the physical banking to a leader in online banking. Since then, HDFC Bank has constantly focused on going digital.

In 2004, only 10% of customer transactions were initiated through internet and mobile. The number has gone up to 92% in 2019.

It is a great example of a company which has taken advantage of its scale and embraced disruption rather than fear it.

These are traits that one should look for in picking stocks. They not only withstand the disruption but also gain from it in the long-run.

Moving on to news from pharma sector, drug firm Alembic Pharma on Tuesday reported a 24.9% rise in its consolidated net profit to Rs 2.92 billion for the December quarter mainly on account of robust sales.

The company had posted a net profit of Rs 2.34 billion for the corresponding period of the previous financial year.

Revenue from operations stood at Rs 13.1 billion for the quarter under review.

"It was another good quarter for the company led by strong growth in the India formulation business. The API Business continued to perform well in the current quarter," Alembic Pharma Managing Director Pranav Amin said.

Alembic Pharma share price has opened the day down by 0.9%.

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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