Sensex Trades Over 500 Points Lower; Dow Futures Down by 65 Points

Thu, 28 Jan 12:30 pm

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Share markets in India are presently trading on a negative note.

The BSE Sensex is trading down by 574 points, down 1.2% at 46,836 levels.

Meanwhile, the NSE Nifty is trading down by 150 points.

Axis Bank and BPCL are among the top gainers today. HDFC Bank and Kotak Bank are among the top losers today.

The BSE Mid Cap index is trading down by 0.2%.

The BSE Small Cap index is trading down by 0.1%.

On the sectoral front, stocks from the real estate sector, are witnessing most of the selling pressure.

On the other hand, stocks from the telecom sector, are witnessing most of the buying interest.

US stock futures are trading lower today, indicating a negative opening for Wall Street.

Nasdaq Futures are trading down by 79 points (down 0.6%) while Dow Futures are trading down by 65 points (down 0.2%)

The rupee is trading at 73.06 against the US$.

Gold prices are trading down by 0.4% at Rs 48,686 per 10 grams.

Gold prices today extended their decline in Indian markets with precious metals weighed down by a stronger US dollar. On MCX, gold futures fell 0.3% to Rs 48,702 per 10 gram in fifth straight day of decline. In the previous session, gold had declined 0.1%.

Note that gold prices are now down about Rs 7,500 from their August highs of Rs 56,300.

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

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

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

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best performing commodities this year to combat the fallout from the coronavirus pandemic.

To know more about gold, check out our article on how to invest in gold here: How to Invest in Gold?

Moving on to stock specific news...

Among the buzzing stocks today is Vodafone Idea.

Vodafone Idea (Vi), which was trying to raise as much as US$ 2 billion in hybrid debt, may now opt for a pure equity round instead.

The development marks a distinct shift in the telecom operator's strategy, announced soon after the Supreme Court (SC) in September extended a deadline to repay outstanding regulatory dues in a staggered manner. Shortly after the SC judgement, Vi had announced plans to raise around $2 billion via hybrid instruments (debt with an optional component of convertible) first, which was to be followed by an equity raise.

VI is considering a change in strategy now because investor sentiment has significantly improved along with the company's prospects. The company now plans to raise capital via a fresh equity issuance through a qualified institutional placement (QIP).

The fundraising is likely to be done in two tranches, and the plan is to bring in a large marquee investor so that the stock gets a fillip. Only after the stock price improves will the second tranche be launched so that the sale does not result in too much dilution of promoters' stake. The appointed bankers for the proposed deal have held a series of meetings with potential buyout funds, high net worth individuals, private equity funds and other institutional investors over the past few weeks.

In the proposed qualified institutional placement, the existing promoters are also likely to participate to ensure their holding doesn't get diluted much and also the much-required capital infusion is done.

The UK's Vodafone Group holds around 43% in Vi, while the Aditya Birla group holds 29%.

Vi continues to lose millions of wireless users every month and needs urgent fund infusion to be able to fund its operations and invest in fresh capital expenditure to upgrade its networks to 5G ecosystem, which is expected to cost several millions.

To improve business viability Vi has been focusing on doubling its average revenue per user (ARPU) to make cash flows sustainable to be able to meet its debt obligations. Vodafone Idea has so far paid Rs 78.5 billion in adjusted gross revenue or AGR dues but still owes more than Rs 500 billion to the department of telecommunications, which it needs to pay in the next 10 years.

We will keep you posted on more updates from this space. Stay tuned.

At the time of writing, Vodafone Idea share price was trading up by 2.2% on the BSE.

Speaking of stock markets, India's #1 trader, Vijay Bhambwani, talks about why it's not a good idea to blindly support the bullish consensus prevalent in the market these days, in his latest video for Fast Profits Daily.

Tune in here to find out more:

Moving on to news from the aluminium sector...

NALCO Approves Rs 7.5 Billion Share Buyback Plan

National Aluminium Company (NALCO) has announced a Rs 7.5 billion buyback as the government rushes to meet its divestment target before the close of the ongoing financial year.

NALCO's board at its meeting on January 27 approved to buy back 6.9% equity of the company at Rs 57.5 apiece, according to an exchange filing. That's at a 24.5% premium over the January 25 closing price of Rs 46.2.

The buyback represents 7.8% of the aggregate of the fully paid-up equity share capital and free reserves as per the financial statements of the company, for the financial year ended March 31, 2020.

NALCO has fixed February 8, 2021 as the record date for ascertaining the eligibility of shareholders for buyback of equity shares.

The central government has set the highest ever divestment target of Rs 2.1 lakh crore for the financial year ending March 2021. Of this, it expected to earn Rs 900 billion by selling its stake in public sector banks and financial institutions and the remaining Rs 1,200 billion by paring holding in central public sector enterprises.

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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