Sensex Ends 379 Points Lower; ONGC & GAIL Rally Over 7%

Thu, 18 Feb Closing

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Indian share markets witnessed selling pressure today and fell on to bearish territory for the third straight session, as investors booked profits post steep gains over the past few weeks.

After opening on a flat note, benchmark indices slid in afternoon deals amid selling in automobile and private bank stocks.

At the closing bell, the BSE Sensex stood lower by 379 points. The NSE Nifty ended down by 90 points.

ONGC was among the top gainers today. Bajaj Finance, on the other hand, was among the top losers today.

SGX Nifty was trading at 15,117, down by 89 points, at the time of writing.

Both, the BSE Mid Cap index and the BSE Small Cap index ended higher by 0.7%.

Sectoral indices ended on a mixed note with stocks in the automobile sector and banking sector witnessing selling pressure.

Oil & gas stocks and power stocks, on the other hand, ended in green.

Shares of oil & gas companies including natural gas producers and suppliers rallied today, a day after Prime Minister Narendra Modi said that the government is committed to bring natural gas under the Goods and Services Tax (GST).

Shares of Gujarat State Petronet, Indraprastha Gas, GAIL (India) and ONGC advanced in the range of 6-10%.

Shares of Dixon Technologies and Adani Enterprises hit their respective 52-week highs today.

Asian stock markets ended mixed following overnight cues from US and European share markets.

Japan's Nikkei inched lower, reversing earlier gains, as investors tuned cautions about the sustainability of a recent rally above the 30,000 level.

As of the most recent closing prices, the Nikkei ended down by 0.2% and the Hang Seng ended down by 1.6%. The Shanghai Composite ended up by 0.6%.

US stock futures are trading lower today. Nasdaq Futures are trading down by 65 points (down 0.5%), while Dow Futures are trading down by 35 points (down 0.1%).

The rupee is trading at 72.58 against the US$.

Gold prices are trading up by 0.4% at Rs 46,400 per 10 grams.

In news from the IPO space...

RailTel Corporation of India's Rs 8.2 billion initial public offer (IPO), which has been seeing strong retail participation at bids totaling 14.7 times the issue size so far, closed for subscription today.

At the time of Indian stock market closing hours today, the offer was subscribed 19.5 times as the issue received bids for 1,193 million equity shares against IPO size of over 61.1 million shares.

The above mentioned IPO size does not include the anchor book portion as the company already mopped up Rs 2.4 billion from anchor investors at higher end of price band of Rs 93-94 per share on February 15.

The portion set aside for qualified institutional buyers saw 26.9 times subscription and that of non-institutional investors 21.4 times. Retail investors have put in bids 14.7 times the reserved portion and employees' book was subscribed 2.37 times.

The mini-ratna PSU is one of the largest neutral telecom infrastructure providers in the country owning an optic fiber network on exclusive Right of Way (RoW) along railway track. The company provides broadband telecom and multimedia network across the country.

The IPO is entirely an offer-for-sale (OFS) through which government will offload 87,153,369 equity shares, or 27.16% stake.

It is interesting to note that the premium that unlisted shares of the company were enjoying in the grey market has plunged over the past few days.

As per reports, the stock was commanding a premium of Rs 12-14 today, which was far below the Rs 47 premium it was enjoying a few days ago.

How the IPO sails through remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Moving on to stock specific news...

Smallcap stocks were in focus today. The BSE Smallcap index hit a fresh 52-week high of 20,127 on the back of continued upward movement in public sector undertaking (PSU) banks.

Shares of PSU banks including Indian Overseas Bank and Central Bank of India rallied 20% each while Bank of Maharashtra was up 10%.

In the past one week, these PSU banks have surged as much as 60% on reports that the government has shortlisted these mid-sized state-run banks, along with Bank of India, for privatisation.

Apart from PSU banks, shares of OnMobile Global, Goldiam International, Magma Fincorp, Adani Gas, Majesco, Greaves Cotton, Linde India, Mayur Uniquoters and HEG have rallied over 25% in the past one week.

Speaking of smallcap stocks, since the lows in March 2020, the smallcap index has gained more than 100%.

While caution is indeed warranted, Richa Agrawal, lead Smallcap Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rebound rally.

Have a look at the history of previous smallcap crashes and rebounds over the last two decades...

As you can see, every big fall in the smallcap index was followed by a sharp up move, a minimum gain 200%. Twice the rebounds were just shy of touching 300%.

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.

Also speaking of smallcaps, in his latest video for Fast Profits Daily, Brijesh Bhatia talks about why smallcap stocks will outperform the Nifty 50 index and for how long such outperformance could last.

As per Brijesh, the smallcap rally has only just begun. Tune in to the video below to find out more:

Moving on to news from the insurance sector, New India Assurance and GIC of India were among the top buzzing stocks today.

Shares of both the state-owned insurance companies were locked in the upper circuit limit of 20% on report that the government is considering privatisation of United India Insurance and General Insurance Corporation.

As on December 31, 2020, the government held 85.8% stake in GIC of India, and 85.4% in New India Assurance Company.

GIC of India is the largest reinsurer in the domestic reinsurance market in India and leads most of the domestic companies' treaty programs and facultative placements.

The New India Assurance Company, meanwhile, is the largest general insurance company in India.

On February 1, Finance Minister Nirmala Sitharaman had announced big-ticket privatisation agenda of the government in the Budget 2021-22 which included selling two state-run banks, one general insurance company, seven major ports and the mega Life Insurance Corporation of India (LIC) public issue.

As per an article in The Economic Times, the finance ministry and government's think-tank Niti Aayog will jointly finalise the general insurer that will be considered for privatization.

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