Sensex Trades Marginally Higher; Dow Futures Up by 55 Points

Thu, 11 Feb 12:30 pm

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Share markets in India are presently trading marginally higher.

The BSE Sensex is trading up by 55 points, up 0.1% at 51,364 levels.

Meanwhile, the NSE Nifty is trading up by 20 points.

Hindalco and GAIL are among the top gainers today. Eicher Motors and Titan are among the top losers today.

The BSE Mid Cap index is trading up by 0.5%.

The BSE Small Cap index is trading up by 0.9%.

On the sectoral front, stocks from the energy sector, are witnessing most of the buying interest.

On the other hand, stocks from the consumer durables sector and IT sector are witnessing most of the selling pressure.

US stock futures are trading higher today, indicating a positive opening for Wall Street.

Nasdaq Futures are trading up by 10 points (up 0.1%) while Dow Futures are trading up by 55 points (up 0.2%)

The rupee is trading at 72.79 against the US$.

Gold prices are trading up by 0.3% at Rs 47,851 per 10 grams.

In global markets, gold prices eased 0.2% as weaker than expected US inflation data dented bullion's appeal. But a flat US dollar and lower Treasury yields kept losses in check.

In tandem with a fall in global rates, gold prices in India fell today while silver also skidded. On MCX, gold futures today fell 0.3% to Rs 47,857 per 10 grams after a four-day rising streak.

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

Speaking of the precious metal, India's #1 trader, Vijay Bhambwani talks about why he thinks the bull market in gold has not come to an end and why he is still bullish on gold, in his latest video for Fast Profits Daily.

Tune in to find out more:

Moving on to stock specific news...

Among the buzzing stocks today is Magma Fincorp.

Rising Sun Holdings, a company controlled in a personal capacity by Serum Institute of India CEO Adar Poonawalla, announced a transaction on February 10, 2021, to acquire a controlling stake in Magma Fincorp (MFL), a non-banking financial company (NBFC).

The deal will be carried out via a preferential issue of Magma Fincorp's equity shares worth Rs 34.5 billion. The deal also includes an open offer as per market regulator norms.

According to an official statement, the deal "is subject to shareholders' and other regulatory approvals and represents 64.7% of MFL's enhanced equity share capital post the issue. Based on current shareholding, Rising Sun Holding would hold 60% stake in the entity post-issuance and the existing promoter group stake would get reduced to 13.3% post-issuance. The net worth of MFL shall increase to over Rs 63 billion post the issuance."

Following the preferential issue, Rising Sun Holdings would be classified as the promoter of MFL. MFL and its subsidiaries shall be renamed and rebranded under the brand name "Poonawalla Finance", subject to regulatory approvals.

Subsequent to the completion of the preferential allotment, the existing financial services business of Poonawalla Finance is proposed to be consolidated into MFL subject to compliance with extant regulations.

According to the official announcement, both parties believe that the transaction would be in the best interests of all the stakeholders and that post-transaction, MFL would be uniquely placed to leverage the vast opportunities in the lending space with an expected reduction in borrowing cost.

Note that strong corporate backing and substantial fund infusion are likely to have a positive effect on the credit rating of the company as well. This infusion would also enable MFL to invest in its housing finance subsidiary and general insurance joint venture, the announcement said.

Economic Laws Practice is acting as the tax and transaction advisor, Khaitan & Co is acting as the legal advisor, and Axis Capital is acting as the merchant banker to the open offer to Rising Sun Holdings.

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

At the time of writing, Magma Fincorp share price was trading up by 9.9% on the BSE.

Speaking of smallcaps, 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 rally.

Despite rallying more than 100% since the March 2020 lows, Richa believes small-cap stocks are set for a massive up move in 2021 and beyond. Here's what she wrote in a recent edition of Profit Hunter...

• The P/E for smallcap index doesn't make sense. There are thousands of listed small companies. Some have negative earnings. The base is not a valid data to work with.
  
  That said, the closest proxy to relative valuations is the Smallcap to Sensex ratio,
  
  Historically, this ratio has averaged 0.43x. In the previous mega runs of the smallcap index, this ratio has gone as high as 0.75x.
  
  In January 2018, when smallcaps peaked, the ratio was at 0.58x.
  
  Guess where this ratio is now after a 100% run up in the smallcap index?
  
  0.38.
  
  It's lower than the median over 2 decades.

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.

Moving on to news from the ipo space...

RailTel Corporation of India to open IPO on February 16, 2021

State-owned information and communications technology infrastructure provider RailTel Corporation of India has decided to launch its initial public offer (IPO) for subscription on February 16, 2021.

The price band for the public issue has been fixed at Rs 93-94 per share, which is 9.3-9.4 times the face value of equity shares. The offer will close on February 18, 2021.

The IPO is a complete offer for sale of 87 million equity shares by the Government of India (GoI). Of which, 500,000 equity shares may be reserved for the company's employees.

The offer will give Rs 8.2 billion at higher price band to the government. Hence, the company will not get any money from this offer. Investors can bid for a minimum 155 equity shares and in multiples of 155 equity shares thereafter.

RailTel Corporation of India is a public sector information and communications technology (ICT) infrastructure provider in India.

It was incorporated in September 2000, with the aim of modernizing the existing telecom system for train control, operation and safety and to generate additional revenues by creating a nationwide broadband and multimedia network by laying optical fibre cable along railway tracks.

This would be the sixth IPO this year, after Indian Railway Finance Corporation, Indigo Paints, Home First Finance Company, Stove Kraft and Brookfield India Real Estate Trust.

ICICI Securities, IDBI Capital Markets & Securities and SBI Capital Markets are the book running lead managers to the issue.

How this IPO sails through 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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