4 Factors Why Markets Surged, Oyo's US$1.2 Bn IPO, and Buzzing Stocks Today

Fri, 24 Sep Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices hit fresh highs amid positive news on Evergrande crisis and Federal Reserve's tapering announcement.

At the closing bell yesterday, the BSE Sensex stood higher by 958 points (up 1.6%).

Meanwhile, the NSE Nifty closed higher by 276 points (up 1.6%).

Bajaj Finserv and Hindalco were among the top gainers.

HDFC Life Insurance and Dr. Reddy's Lab, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.3% and 0.9%, respectively.

Sectoral indices ended on a positive note with stocks in the realty sector, banking sector and finance sector witnessing most of the buying interest.

FMCG stocks, on the other hand, witnessed selling pressure.

Shares of KEI Industries and Persistent Systems hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 0.4% at Rs 46,468 per 10 grams at the time of closing stock market hours yesterday.

Here are 4 Factors Why Indian Share Markets Rallied

Fed announcement: The biggest trigger for the Indian markets is considered to be the support from the US markets amid the Federal Reserve policy decision on Wednesday to keep interest rates steady.

The US Fed indicated that 'moderation in the pace of asset purchases may soon be warranted' and even then, markets the world over, including India, rejoiced.

It has not given any timeline for tapering but it can be expected to begin as soon as November this year and a rate hike in 2022 looks a clear possibility.

Government reforms & liquidity push: The continuous reforms being undertaken by the government is helping improve the outlook for sectors thus pushing markets higher.

The production linked incentive (PLI) schemes for the various sectors and the latest reforms for the telecom sectors are some such examples. Overall, this is coming at a time when people are losing interest in China. This is turning to be a very positive thing for Indian markets.

Also, strong interest from retail investors and foreign institutional investors (FIIs) is among other factors that are keeping the bull market intact.

Resolving crisis in China: Some positive news from struggling developer China Evergrande Group also boosted investor sentiment. One of the units of Evergrande said that it has 'resolved' a coupon payment on an onshore bond.

Concerns also eased after People's Bank of China injected US$17 bn into the banking system. This boosted the global sentiment, which rubbed off on Indian markets too.

Further, experts believe investors as India are seeing a silver lining amid the Chinese crisis. They believe the Chinese crackdown earlier and the Evergrande crisis now bode well for India, as it can facilitate capital flows.

Realty stocks rally: Meanwhile, the re-opening theme, economy revival, and declining covid cases are the domestic factors aiding benchmarks.

Realty, hospitality, and entertainment stocks have become the most beneficial sectors due to these multiple triggers. Of all the benefitted sectors, realty stocks are powering more strength to the Indian markets on the back of a strong outlook.

Moreover, the majority of the lenders coming out with home loan rate cuts as a festive offer, had not just only helped the banks and financials to pick up the business but it is also creating an opportunity for the realty sector.

In the last four sessions, the BSE Realty Index has gained around 20%, and has touched a new 52-week high to 4,045.7 levels surging for around 11% yesterday. The surge in the index is mostly led by Godrej Properties up near 12% to hit a new record high on the BSE.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Top Stocks in Focus Today

Among the buzzing stocks today will be Mphasis.

Mphasis share price surged over 4% and touched a 52-week high of Rs 3,392, a day after the company announced the acquisition of US-based Blink Interactive, Inc.

Mphasis Corporation, USA, a wholly-owned subsidiary of the company, has acquired Blink Interactive, Inc, a Washington Corporation, consequent to signing a definitive agreement regarding the acquisition.

The acquisition is expected to provide access marquee logos, strengthen experience business and is leadership and revenue growth accretive, the company said.

The company has acquired a 100% stake in Blink for a total consideration of up to US$94 m, including earnouts.

Infosys share price will also be in focus today.

Infosys announced a strategic collaboration with Amazon Web Services (AWS) to develop quantum computing capabilities and use cases.

Infosys will use Amazon Braket to explore and build multiple use cases in quantum computing as part of Infosys Cobalt cloud offerings.

Amazon Braket is a fully managed quantum computing service that helps scientists and developers get started with the technology and accelerate research and discovery.

This will enable researchers and developers to experiment and study complex computational problems as quantum technologies continue to evolve.

Enterprises will get access to use cases for rapid experimentation and can explore how quantum computing can potentially help them in the future in a variety of areas, assess new ideas and plan adoption strategies to drive innovation.

The use of Amazon Braket by Infosys aims at getting businesses ready for a future where quantum computers will impact business.

Paras Defence IPO Oversubscribed by 304.26 Times on Final Day

Paras Defence and Space Technologies' maiden public offer continues witnessed healthy response from investors.

The issue has been oversubscribed by 304.26 times receiving bids for 2.17 bn equity shares against initial public offer (IPO) size of 7.14 m shares on 23 September, the final day of bidding.

Total bids received were worth more than Rs 380 bn at upper price band of Rs 175 per share.

Retail investors, which remained at the forefront to support the issue, have put in bids 112.81 times their reserved portion, while a part set aside for non-institutional investors (NII or HNIs) is subscribed 927.70 times.

Qualified institutional buyers, including FIIs, domestic financial institutions and mutual funds, bought 169.65 times shares against their reserved portion.

The company plans to mobilise Rs 1.7 bn through its public issue, of which it already garnered Rs 512.3 m from anchor investors before the issue opening, at higher end of price band of Rs 165-175 per share.

Oyo to File for US$ 1.2 bn IPO Next Week

According to a leading financial daily, Oyo Hotels & Homes, a SoftBank Group-backed Indian hospitality startup, is expected to file for an IPO next week.

The hotel aggregator's IPO is tentatively pegged at US$ 1-1.2 bn.

The initial share sale will consist of a fresh issue of shares and an offer for sale from existing shareholders.

The listing plan follows a stellar debut by food delivery firm Zomato in July. Berkshire Hathaway Inc.-backed Paytm and private equity firm TPG-backed Nykaa have also filed for their IPOs.

Oyo, in which SoftBank owns a 46% stake, has endured months of layoffs, cost-cuts and losses during the global health crisis. Its founder and CEO Ritesh Agarwal had said in July that business was likely to return to levels seen before the second wave of Covid-19 infections in India and grow from there.

Last month, it received a US$ 5 m investment from Microsoft.

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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