Indigo Paints IPO, India's Crude Oil Production in December, and Buzzing Stocks Today

Fri, 22 Jan Pre-Open

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Indian share markets witnessed a sharp sell-off during closing hours yesterday and ended lower.

Benchmark indices gave up early gains and slipped into the red during the last hour of trading amid reports of a massive fire that broke out in the Serum Institute of India (SII), the manufacturer of Covidshield vaccine.

At the closing bell yesterday, the BSE Sensex stood lower by 167 points. The NSE Nifty ended down by 54 points.

The BSE Sensex tanked 785 points from record high levels of 50,184 to hit an intra-day low of 49,399.

Bajaj Finance was among the top gainers. ONGC, on the other hand, was among the top losers.

The BSE Mid Cap index ended down by 0.9%. The BSE Small Cap index ended lower by 0.7%.

Sectoral indices ended on a mixed note with stocks in the consumer durables sector and energy sector witnessing buying interest.

Realty stocks and metal stocks, on the other hand, witnessed selling pressure.

Shares of Ceat and Polycab India hit their respective 52-week highs yesterday.

Gold prices were trading up by 0.2% at Rs 49,617 per 10 grams at the time of closing stock market hours yesterday.

Note that the BSE Sensex crossed the historical milestone of 50,000 in yesterday's session as benchmark indices scaled fresh lifetime highs on the back of favourable global cues.

The BSE Sensex rose from 40,000-mark hit on October 8, 2020 to 50,000 in just 74 sessions. Developments on the vaccine front, a change of guard in the United States, FII buying and recovery in economic growth are the key factors behind this rally.

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. The Sensex valuation is at nearly 40 times.

Have a look at the two charts below, in the order they have been placed.

Near Term Volatility in Sensex Compensated by Long Term Gains

The year-on-year change in the Sensex was hardly predictable but someone who stayed invested multiplied every lakh nearly 14 times.

As per Tanushree Banerjee, co-head of Research at Equitymaster, 2021 could be one of the best years for individual investors.

Here's what she wrote in one of the editions of Profit Hunter:

• 2021 could be one of the best years for individual investors.
  
  You read that right. Investing is one of those rare pursuits where amateurs can have an advantage over professional fund managers.
  
  It happens in almost no other field. If you compete against a professional sports person, you'd lose every time. As an amateur doctor or scientist, you need years of training before performing highly specialised tasks.
  
  However, individual investors who have a strategy to create long term wealth, stand a good chance at outperformance.
  
  Most professional fund managers can't afford to have long time horizons. A year or two of poor performance and they risk the sack.
  
  But an individual investor can sit tight over high conviction stocks and invest consistently to see the magic of compounding.
  
  Just like the investors in Titan saw their wealth creation unfold since 2004.
  
  So, 2021 could be extremely profitable, over time, provided you reset your portfolio with the right kind of safe assets and safe stocks.
  
  For the next decade, your best fund manager could none other than you!
  
  Prepare well and ensure you make the most of it.

In her latest video, Tanushree discusses the best safe assets for 2021.

Tune in to the video here:

Top Stocks in Focus Today

Among the buzzing stocks today will be Tata Communications.

The Union government is selling its residual stake in Tata Communications through a combination of an offer for sale (OFS) and a strategic selloff in FY21. The Centre holds a 26.1% stake in Tata Communications, earlier known as Videsh Sanchar Nigam (VSNL).

In a notice, the Department of Investment and Public Asset Management (DIPAM) said a part of the shareholding will be offered through OFS and the balance, including any leftover portion in OFS, will be offered to strategic partner Panatone Finvest, which is part of the Tata group. It has now sought bids from merchant bankers to manage the proposed sale.

The transaction is to be completed by March 20, 2021.

Consumer electrical goods maker Havells India share price will also be in focus today as the company reported a 74.5% jump in its consolidated net profit to Rs 3.5 billion for the third quarter ended on December 2020 (Q3FY21).

Its revenue from operations was up 39.7% to Rs 31.8 billion during the period under review as against Rs 22.7 billion in the corresponding period last fiscal.

Revenue from its cables segment was up 27.1% to Rs 9.1 billion. Revenue from switchgears segment was Rs 4.4 billion, up 32.1%.

Meanwhile, in a separate filing, the company said its board has declared an interim dividend of 300%, which is Rs 3 per equity share.

IPO Buzz: Indigo Paints IPO Sees Overwhelming Response from Retail Investors

In latest developments from the IPO space...

The initial public offer (IPO) of Indigo Paints was subscribed 4.6 times during closing stock market hours on January 21, the second day of bidding. The offer will close on January 22.

Investors including employees have put in bids for 25.5 million equity shares against offer size of over 5.5 million equity shares.

The reserved portion of retail investors was subscribed 7 times. The portion set aside for qualified institutional buyers was subscribed 48% and non-institutional investors have put in 4 times bids against their reserved portion.

The price band for the issue has been fixed at Rs 1,488 and Rs 1,490 per share. At the upper end of the price band, the IPO is expected to fetch Rs 11.7 billion.

Meanwhile, the public offer of Home First Finance Company, which opened for subscription yesterday, was subscribed 79% by noon hours yesterday.

The affordable housing finance company's public issue received bids for 12.4 million equity shares against an offer size of more than 15.6 million shares.

The public issue comprises a fresh issue of Rs 2.7 billion and an offer for sale (OFS) of Rs 8.9 billion by promoters True North Fund V LLP and Aether (Mauritius), investor Bessemer India Capital Holdings II Ltd, and two individual shareholders-PS Jayakumar and Manoj Viswanathan.

Yesterday, the company raised a little over Rs 3.46 billion from anchor investors, ahead of its initial share-sale.

The company has fixed a price band of Rs 517-518 per share.

Half of the issue is reserved for qualified institutional buyers, 35% for retail investors and 15% for non-institutional buyers.

How the above IPOs sail through remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

India's Crude Oil Production Falls 3.6% YoY in December

In news from the oil & gas sector, India's crude oil production fell 3.6% and natural gas shrank 7.1% in December from a year earlier as producers struggled with ageing fields.

ONGC, the nation's largest producer of oil and gas, registered a 2.8% decline in oil production while Oil India's output was down 16.2%, according to the Oil Ministry data.

Fields operated by the private sector witnessed 11.6% decline in oil production.

India's oil production has been falling for almost a decade due to ageing fields and the absence of any major discovery for years. Both state and private players have been working on investment plans to raise recovery from older fields.

Domestic gas output, however, is expected to rise in the coming months as new fields have begun production.

Crude oil imports increased 3.4% in December from a year earlier. The consumption of petroleum products was 1.8% lower than the previous December. The dependence on crude import for domestic consumption was 84.8% in December.

The price of the Indian basket of crude averaged US$ 49.84 per barrel in December as against US$ 43.34 in November and US$ 65.50 in December 2019.

How these numbers pan out in the coming months remains to be seen. Stay tuned for all the 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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