Sensex Ends 162 Points Lower; Realty and Energy Stocks Witness Selling

Mon, 8 Apr Closing

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India share markets witnessed selling pressure during closing hours and ended their trading session on a negative note.

At the closing bell, the BSE Sensex stood lower by 162 points (down 0.4%) and the NSE Nifty closed down by 61 points (down 0.5%). The BSE Mid Cap index ended the day down 0.7%, while the BSE Small Cap index ended the day down 0.4%.

Sectoral indices ended in the red with stocks in the realty sector and energy sector witnessing most of the selling pressure.

The rupee was trading at 69.68 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was up by 0.5% and the Shanghai Composite was down by 0.1%. The Nikkei 225 was down 0.2%.

European markets were also trading on a mixed note. The FTSE 100 was down by 0.02%. The DAX was trading down by 0.3%, while the CAC 40 was up by 0.03%.

In the news from the realty sector, DLF share price was in focus today. The stock of the company witnessed selling pressure on reports of a block deal.

As per a leading financial daily, about 68.1 million shares or 3.5% shares of the company changed hands in a single block deal whose buyers and sellers were not known immediately. The company is taking all steps to become a debt-free company. On Friday, a report suggested that the company is weighing a plan to team up with General Insurance Corporation of India (GIC) to float a part real estate investment trust (REIT) in future.

Last month, the company had announced the launch of a Qualified Institutional Placement (QIP) programme to raise Rs 31.8 billion.

This is the third major fundraising from DLF. In 2007, DLF raised close to Rs 92 billion through initial public offer (IPO). In 2013, the company had raised nearly Rs 19 billion through the institutional placement programme.

Reportedly, the company intends to utilize the net proceeds primarily towards prepayment/repayment of a portion of the borrowings. As of December 31, 2018, the company's total debt and net debt aggregated to Rs 192.8 billion and Rs 173 billion.

The company also announced its second joint venture with global realty investment, development and management firm Hines last month. India's largest real estate developer will work on a project with total value of 70 billion.

DLF Home Developers (DHDL), a wholly owned subsidiary of DLF, and Green Horizon Trustee, an affiliate of Hines, have entered into a joint venture (JV) to develop a high-end commercial project in Gurugram.

To know more about the company, you can read DLF's latest result analysis and DLF's annual report analysis on our website.

Speaking of the realty sector, note that the BSE Realty index has been volatile in the last five years.

Have a look at the chart below to see its performance:

Volatile Performance of BSE Realty Index in the Last Five Years

Here's what Sarvajeet Bodas wrote about it in one of the recent editions of The 5 Minute WrapUp...

• In 2017, the BSE Realty index was the best performer with a massive gain of 98%. In the next year, the index was the worst performer with a decline of 31%.
  
  In 2018, the realty sector took a beating on the back of concerns of higher interest rates and accounting changes (from percentage of completion method to completion method). The NBFC crisis added to the woes.
  
  Interestingly, 2018 also witnessed some improvement in real estate sales.

2019 hasn't been good so far.However, the recent budgetary support and interest rate reduction by the RBI could help to revive demand.Buying the right real estate stock today is the way to go. Sarvajeet believes this could be the turning point for the real estate sector.

Moving on to the news from the IPO space, the initial public offer of Polycab India which hit the markets last week witnessed good demand on its second day of the bidding process today.

Data available with NSE showed the IPO was subscribed 1.2 times at the time of writing. The issue received bids for 2,08,89,765 units against the total size of 1,76,37,777 shares. Qualified institutional buyers (QIBs) quota has was subscribed 2.11 times, non-institutional investors (NII) 0.52 times and retail 1.15 times so far.

Polycab India is engaged in the business of manufacturing and selling wires and cables and fast moving electrical goods (FMEG) under the "POLYCAB" brand.

According to CRISIL Research, Polycab India is the largest manufacturer in the wires and cables industry in India, in terms of revenue from the wires and cables segment and provides one of the most extensive range of wires and cables in India.

During the financial year 2017-18 (FY18), the company had a market share of approximately 18% of the organized wires and cables industry, and approximately 12% of the total wires and cables industry in India, estimated at Rs 525 billion based on manufacturers realization.

Polycab India manufactures and sells a diverse range of wires and cables such as power cables, control cables, instrumentation cables, solar cables, building wires, flexible cables, flexible/single multi core cables, communication cables and others including welding cables, submersible flat and round cables, rubber cables, overhead conductors, railway signaling cables, specialty cables and green wires.

To get a detailed view of the IPO, you can read Ankit Shah's latest note in the Equitymaster Insider: Polycab India IPO: All You Need to Know.

Speaking of IPOs, we at Equitymaster believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs.

If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

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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