Sensex Cracks 1,100 Points on Rising Geopolitical Concerns; Metal, Banking & Finance Stocks Bleed

Mon, 14 Feb 10:30 am

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Asian stock markets are trading on a negative note today as geopolitical risks over Ukraine rippled through global markets.

The Hang Seng and the Shanghai Composite are trading down by 1.3% and 0.6%, respectively. The Nikkei plunged 2.2%.

In US stock markets, Wall Street indices ended sharply lower on Friday after the US warned that a Russian invasion of Ukraine could come within days and the UK's foreign office urged its citizens to leave the country.

The Dow Jones Industrial Average ended down 504 points, or 1.4%, the S&P 500 lost 85 points, or 1.9% and the Nasdaq Composite dropped 395 points, or 2.8%.

Back home, Indian share markets are trading deep in the red, following the trend on SGX Nifty.

Benchmark indices were set for a gap-down open, tracking negative cues from global peers and geopolitical worries. The sentiment is further dampened by fears of an interest rate hike.

Market participants are tracking shares of Adani Enterprises, Grasim Industries, Coal India, Eicher Motors, and Adani Wilmar as these companies will announce their December quarter results today.

In early trade, Sensex dipped over 1,500 points while the Nifty fell over 450 points below the crucial 17,000-mark.

At present, the BSE Sensex is trading down by 1,141 points. Meanwhile, the NSE Nifty is trading lower by 342 points.

TCS and ONGC are among the top gainers today. JSW Steel and HDFC, on the other hand, are among the top losers today.

The BSE Mid Cap index is trading down by 2.1%. The BSE Small Cap index is trading lower by 2.5%.

All sectoral indices are trading in red with stocks in the metal sector, finance sector and banking sector witnessing most of the selling.

Shares of ONGC hit their 52-week high today after posting a stellar set of results over the weekend.

The rupee is trading at 75.59 against the US$.

Gold prices are trading up by 0.9% at Rs 49,531 per 10 grams.

Gold has held its ground today, near a three-month high touched in the previous session, as lingering concerns surrounding Ukraine kept the metal's safe-haven appeal intact.

Crude oil prices hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger US and European sanctions that would disrupt exports from the world's top producer in an already tight market.

Speaking of stock markets, in his latest video for Fast Profits Daily, India's #1 trader Vijay Bhambwani explains how you can protect yourself against being scammed when buying gold.

The below video is all about how to safeguard yourself from being cheated by unscrupulous people and ensure peace of mind.

You can watch the video here: Don't Get Cheated While Buying Gold

In latest developments from the IPO space, TVS Supply Chain Solutions has sought the Indian market regulator's approval to raise as much as Rs 20 bn by selling new shares in an initial public offering (IPO).

Existing shareholders including founder TVS Mobility and investors Gateway Partners and Tata Capital Financial Services plan to sell as many as 59.48 m shares in the IPO, according to the company's draft prospectus.

The company plans to repay some of its debt and buy out minority shareholders in its UK unit from the proceeds.

TVS Supply Chain, which counts Mahindra & Mahindra (M&M), Daimler India Commercial Vehicles, Sony India and Hyundai Motor India among its customers in India, has a presence in the UK, Spain, Germany, Australia and Singapore.

JM Financial, Axis Capital, JP Morgan India, BNP Paribas, Edelweiss Financial Services and Equirus Capital are the banks managing the share sale.

Note that Delhivery, another Indian logistics firm, had received the market regulator's approval last month for an initial share sale to raise as much as Rs 74.6 bn.

In other news, the wait is officially over now as Life Insurance Corporation of India (LIC) has filed its draft share sale prospectus with the capital markets regulator, paving the way for India's largest IPO.

What's more, there's a possibility that LIC will become India's most valuable listed company, toppling Reliance Industries after listing on the stock exchanges.

LIC plans to sell 316.25 m shares, which is about 5% of its total equity base, said the DRHP filed with markets regulator.

The 65-year-old LIC has a total equity base of 6.32 bn shares.

The IPO is fully an OFS which means that the proceeds will go fully towards the government and help it reach its disinvestment target.

According to the offer document, a portion of shares not exceeding 5% of the offer will be reserved for employees. Similarly, another portion not exceeding 10% will be reserved for eligible policyholders.

The pricing of the IPO will be decided in due course, two days before the opening of the public offer.

It remains to be seen how the upcoming IPO of LIC pans out. We will keep you updated on the latest developments from this space, stay tuned.

Note that the prospectus also said LIC's embedded value is Rs 5,396.9 bn. Embedded value is nothing but a tool to measure the value of a life insurance company, basically the sum of the present value of all future profits from the existing business and shareholders' net worth.

Private life insurance companies are currently trading at two to four times their embedded value.

Speaking of the insurance sector, have a look at the chart below which shows the investment assets of non-life insurers and life insurers over the past 10 years:

Investment Assets of Non-Life Insurers 11x That of Life Insurers

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, the above chart is enough proof of how big an earning opportunity is the zero-cost float to the non-life insurers. Their investment assets under management is nearly 11 times that of life insurers.

Last month, Tanushree recorded a video explaining how you should evaluate the LIC IPO.

Insurance is not an easy sector for investors to figure out. The financial statements are full of jargon. And in fact they don't resemble financials of any other sector.

So watch the below video before you consider applying for LIC's IPO.

Moving on to stock specific news...

Coal India is among the top buzzing stocks today.

As per sources, the total dividend payout by Coal India during the current fiscal is likely to be higher than the 2020-21 financial year as the miner is expected to post healthy revenue and growth in profit.

The Maharatna public sector undertaking (PSU) has already announced the first interim dividend at Rs 9 per share in December.

The interim dividend outgo was around Rs 55.5 bn and the government was the largest beneficiary as it received approximately Rs 36.7 bn for its over 66% stake.

Coal India had announced a total dividend at Rs 16 per share last fiscal.

A board meeting of Coal India is scheduled today to consider and approve the third-quarter results.

Coal India share price is currently trading down by 1.1%.

To know more, check out Coal India's 2020-21 annual report analysis.

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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