Sensex Trades on a Volatile Note; Tata Steel, L&T and ICICI Bank Top Losers

Wed, 16 Feb 10:30 am

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Asian share markets are higher today following strong gains on Wall Street as there was optimism following diplomatic efforts to avoid a Russian invasion of Ukraine.

The Nikkei rallied over 2% while the Hang Seng advanced 1.3%. The Shanghai Composite is up 0.7%. All indices have extended early gains.

In US stock markets, Wall Street indices ended sharply higher on Tuesday as signs of de-escalating tensions along the Russia-Ukraine border soother nerves and investors welcomed the positive signs.

The Dow Jones gained 1.2% while the tech heavy Nasdaq zoomed 2.5%.

Back home, Indian share markets opened on a positive note following the trend on SGX Nifty.

However, benchmark indices soon after the opening in green, turned volatile and slipped into red.

Vedant Fashions made its Dalal Street debut today listing at a premium of 8%. The company had raised 31.5 bn via its IPO by selling shares in the range of Rs 824-866 apiece between 4-8 February.

Meanwhile, market participants are keeping a watch on Schaeffler India as it will announce December quarter results today.

The BSE Sensex is trading down by 94 points. Meanwhile, the NSE Nifty is trading lower by 18 points.

M&M and HDFC are among the top gainers today. L&T, on the other hand, is among the top losers today.

The BSE Mid Cap index is up 0.4%. The BSE Small Cap index is trading higher by 0.8%.

Sectoral indices are trading mixed with stocks in the power sector, realty sector and oil & gas sector witnessing buying.

Metal stocks, on the other hand, are trading in red.

Shares of GMDC and RHI Magnesita hit their 52-week highs today.

The rupee is trading at 75.20 against the US$.

Gold prices are trading down by 0.1% at Rs 49,357 per 10 grams.

Meanwhile, silver prices are trading up by 0.1% at Rs 63,050 per kg.

Gold is down today, pulling further away from an eight-month peak scaled in the previous session, as signs of a slight de-escalation in the Russia-Ukraine standoff diminished the appeal of safe havens.

In news from the bond market, the Reserve Bank of India (RBI) has cancelled an auction of government securities (G-Secs) worth Rs 240 bn which was scheduled to be held this week on 18 February.

• On review of the government of India's cash position, it has been decided, in consultation with Reserve Bank of India, to cancel the auction of all the securities scheduled to be held on February 18, 2022, as per the issuance calendar dated September 27, 2021, for dated securities during the second half of the current financial year 2021-22.

Before this, the G-Secs auction scheduled for 11 February was also cancelled following a sharp rise in bond yields after the announcement of a record borrowing program earlier this month.

The government plans to borrow a record Rs 11.6 lakh crore from the market in 2022-23 to meet its expenditure requirement to prop up the economy hit by the Covid-19 pandemic.

This is nearly Rs 2 lakh crore higher than the current year's Budget estimate of Rs 9.7 lakh crore.

In latest developments from the IPO space, Life Insurance Corporation (LIC) has sought exemption from the market regulator on deposits with exchanges for its upcoming initial public offering (IPO).

Any company floating an IPO has to deposit an amount equivalent to 1% of the issue size with stock exchanges. The security deposit, aimed at countering fraud, is returned to the issuer after the share sale.

While exact figures are not out, the street expects LIC to raise Rs 500 bn to Rs 900 bn. So LIC may have to deposit Rs 5-8 bn or more with exchanges which may be a challenge for an IPO of LIC's size.

The markets regulator has already granted an exemption to LIC on furnishing the financial statements of subsidiaries while filing consolidated financial information.

LIC has also asked for an exemption on disclosing the consolidated number of creditors, decision for which is still pending.

It remains to be seen how India's largest IPO pans out. We will keep you updated on the latest developments from this space, stay tuned.

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...

Tech Mahindra is among the top buzzing stocks today.

IT major Tech Mahindra on Tuesday said it will acquire 80% stake in Australian artificial intelligence (AI) firm Geomatic.AI for 6 m Australian dollars through its Singapore-based subsidiary. In rupee terms, this amount to Rs 320 m.

As part of this deal, Tech Mahindra will have 80% shareholding in Geomatic.AI while Ausnet will have 20% shareholding and transfer digital workforce, intellectual property, assets and client contracts to the newly formed entity.

Geomatic.AI Pty is a company incorporated under Australian laws on 7 February 2022 and operates in the field of energy and utilities.

Note that the recent acquisitions made by Tech Mahindra had raised questions as it was on a continuous spree. With the most recent acquisition, Tech Mahindra completed its 11th acquisition in fiscal 2022.

The Indian IT sector is one of the few sectors that is witnessing strong demand conditions even during the pandemic, with businesses big and small across the globe, demanding a range of solutions to digitize their day-to-day operations.

To keep up with the demand, several top tier Indian tech players like Tech Mahindra, Infosys and Wipro have gone on an acquisition spree overseas over the last 15-18 months and the valuations for these purchases have shown an upward trend.

Shares of Tech Mahindra are currently trading down by 0.2%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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