Sensex Opens Flat; Automobile & Banking Stocks Drag

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Asian share markets are lower today as the number of new coronavirus cases at the outbreak's epicenter jumped sharply. The Shanghai Composite is down by 0.6%, while the Hang Seng is down 0.2%. The Nikkei 225 is trading down by 0.1%.

Back home, India share markets have opened the day on a negative note. The BSE Sensex is trading down by 58 points while the NSE Nifty is trading down by 19 points.

The BSE Mid Cap index and the BSE Small Cap index have opened the day on a flat note.

Sectoral indices have opened the day on a mixed note with stocks in the consumer durables sector and power sector witnessing buying interest, while automobile stocks and banking stocks are trading in red.

In news from the banking sector, as per an article in The Economic Times, JC Flowers & Co, a private equity fund specialising in the turnaround of financial firms around the world, is leading a consortium that plans to invest as much as US$ 2 billion in Yes Bank.

About half-a-dozen investors, including JC Flowers & Co, Tilden Park Capital Management, OHA (UK) and Silver Point Capital, have sent in 'non-binding' expressions of interest, and the investment could be in two stages.

Here's an excerpt from the article:

• The bank and its financial advisors are currently in discussions with these investors on the commercial terms, including pricing, of their investments which will be subject to certain conditions and receipt of requisite approvals, including regulatory approvals with respect to the size of the stake to be acquired, as well as necessary dispensations with regard to applicable pricing guidelines.

Yes bank said that the capital raising process is engaging the bank's attention and hence it will publish its results for Q3FY20, and the nine months ended December 31, on or before March 14, 2020.

The bank added that this exceeds the 45-day period from the end of the relevant quarter to announce results, as stipulated by the markets regulator.

Note that, Yes Bank's financials came under scrutiny last year due to surging bad loans and management uncertainty after the Reserve Bank of India declined to extend the term of founder Rana Kapoor as the chief executive in 2018.

The bank rejected Canadian billionaire Erwin Singh Braich's offer to buy US$ 1.2 billion worth of shares late last year.

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

Yes Bank share price has opened the day up by 4%.

Moving on, in latest developments from the IPO space, India's largest agri derivatives exchange, National Commodity & Derivatives Exchange (NCDEX) plans to go public to raise about Rs 5 billion.

The exchange filed the draft red herring prospectus with markets regulator on Tuesday. The IPO will offer an exit to some of the existing investors in the bourse, and will also entail fresh issuance of Rs 1 billion.

The exchange proposes to utilize the net proceeds towards contribution to the Core Settlement Guarantee Fund and funding towards net worth requirements of National Commodity Clearing (NCCL).

Some of the shareholders who have decided to offer their shares in the offer for sales include NABARD, Punjab National Bank, Oman India Joint Venture Fund, Canara Bank and IFFCO.

NSE is the single-largest shareholder in NCDEX with 15% stake, while LIC and NABARD hold around 11% each.

How this IPO sails through remains to be seen. Stay tuned for more updates from this space.

Speaking of IPOs, in one of the editions of The 5 Minute WrapUp, Ankit Shah shared how IPOs offer insights into the mood of the stock markets.

He picked the six most successful IPOs of 2019 and checked the retail investor enthusiasm for them.

Obviously, all these IPOs were oversubscribed across investor categories. But the level of retail investor enthusiasm differed widely, depending on the overall market sentiments. This can be seen in the chart below:

Are Retail Investors Back in the IPO Game?

Here's what Ankit wrote about it...

• Clearly, IRCTC witnessed the highest number of bids for the retail category. Factoring in the discount of Rs 10 per share for the retail category, the total bids were worth a whopping Rs 3,242 crore. Over five times the entire IPO size!
  
  Polycab India and the recent IPO of CSB Bank also received a strong thumbs-up from retail investors.

Does this hint that retail investors are coming back to the markets? Could we witness of flurry of IPOs in the coming months?

It would be interesting to see how this trend pans out in the coming months.

Ankit keeps a tab on all the IPOs at his premium newsletter Equitymaster Insider (requires subscription).

In one of his recent articles, he has explained why keeping a tab on the IPO market is vital to your overall investing goals. You can read it here: What I Learnt from IPOs in 2019 (requires subscription).

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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