China's Impact on India's Electronic Companies, Tepid Debut by Nuvoco Vistas, and Buzzing Stocks Today

Tue, 24 Aug Pre-Open

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Indian share markets ended on a positive note yesterday.

Benchmark indices edged higher tracking firm global market cues, and tracking gains in index heavyweights Reliance Industries, TCS and HDFC Bank.

At the closing bell yesterday, the BSE Sensex stood higher by 226 points (up 0.4%).

Meanwhile, the NSE Nifty closed higher by 46 points (up 0.3%).

HCL Technologies and TCS were among the top gainers.

Adani Ports and Grasim Industries, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended down by 0.9% and 1.6%, respectively.

Sectoral indices ended on a mixed note with stocks in the IT sector and telecom sector witnessing buying interest.

Auto and realty stocks, on the other hand, witnessed selling pressure.

Shares of Nestle India and Bajaj Finance hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading up by 0.1% at Rs 47,204 per 10 grams at the time of closing stock market hours yesterday.

Speaking of stock markets, in his latest video, Co-head of Research Rahul Shah talks about the stellar performance of Tata group companies in the current bull market.

In the video, Rahul also compared the performance over a 5-year and a 10-year period.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Among the buzzing stocks today will be Aurobindo Pharma.

Shares of Aurobindo Pharma zoomed 6% yesterday on BSE after the company terminated its agreement to acquire a stake in Cronus Pharma.

In an exchange filing, the pharmaceutical company said,

• The board of directors, in its meeting held on Friday, 20 August 2021, has approved the termination of the aforesaid agreements and the parties have mutually agreed and terminated the said agreements.

On 12 August 2021, the company had entered into a binding agreement with Cronus Pharma Specialities India to acquire a 51% stake in the company for Rs 4.2 bn.

However, the acquisition later raised concerns over capital allocation even though the management stated that it does not fall within the purview of a related-party transaction.

Cronus is a pharmaceutical company that develops, manufactures and distributes generic veterinary pharmaceutical products.

The company has a factory at Hyderabad with 67 products in its pipeline, of which 22 have been filed and 6 have been approved by the Centre for Veterinary Medicine, USFDA.

HDFC Bank share price will also be in focus today.

Paytm and India's largest private sector bank, HDFC Bank have announced a strategic partnership to build comprehensive solutions across payment gateway, point of sale machines and credit products including Paytm Postpaid.

The partnership aims to empower new businesses which have recently ventured online, and enable them to scale up.

IPO bound-Paytm and HDFC Bank are coming together for two broad PoS offerings.

In the first, HDFC Bank will drive merchant partnerships across India, to whom Paytm will offer its existing range of Android POS devices.

As part of this, HDFC Bank's salespersons will start selling Paytm's payment solutions in the market. HDFC Bank will be the payment partner, while Paytm will be the distribution and software partner.

Secondly, Paytm and HDFC Bank will jointly launch a co-branded PoS product in the retail segment, which Paytm will have the option to offer it to its own customer base.

Note that this is a notable partnership. In 2017, HDFC Bank's then India Managing Director Aditya Puri had said payment wallets like Paytm have no future.

But over time, Paytm's offerings have expanded. Paytm now has the license to operate as a payments bank.

Nuvoco Vistas Shares Debut at 17% Discount to Issue Price

Shares of India's fifth largest cement maker Nuvoco Vistas Corporation made a weak debut on the bourse yesterday as the stock listed at a 17.4% discount to the issue price of Rs 570.

The scrip opened at Rs 471 on the BSE and at Rs 485 on the NSE.

The grey market had already indicated a downward trend due to weak market conditions in the previous week. The impact was seen in the listing of CarTrade Technologies during which shares of the company closed lower by 7.3% in debut trade despite strong subscription.

The Rs 50 bn initial public offering of the cement maker had seen tepid response from investors during 9-11 August as it was subscribed only 1.7 times largely driven by qualified institutional buyers (QIBs).

The issue had received bids for 107 m equity shares against the IPO size of 62.5 m equity shares.

The portion set aside for QIBs was subscribed 4.2 times, while the non-institutional investors (NIIs) and retail investors' portion remained undersubscribed.

The offer comprised a fresh issue of Rs 15 bn and an offer for sale of Rs 35 bn by promoter Niyogi Enterprise.

Nuvoco is the fifth largest cement company in India and the largest cement company in east India in terms of capacity.

China Covid Curbs Likely to Hit Indian Electronics Companies in Festive Season

Manufacturers of consumer electronics, including smartphones, have been forced to cut production by 10-30% as China is closing or imposing curbs at airports and ports due to Covid infections among workers.

This has increased freight costs by 40-50%, having almost doubled in the past three months with companies saying they will be compelled to increase prices.

China accounts for 60-70% of components used in electronic goods made in India.

Because of this, the supply of components ahead of the crucial festival season in India has hit.

On 21 August, cargo operations at Shanghai's Pudong international airport were shut indefinitely with ground-handling company Shanghai International Airport Services announcing a Covid-19 quarantine policy for workers handling international flights after a few cases were detected.

This reflects China's zero-tolerance policy on Covid cases in ports and airports.

This is choking component supplies to India with the US and Europe also stepping up imports from China to prepare for their holiday season in the next quarter.

We will keep you posted on more updates from this space. Stay tuned.

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

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