Sensex, Nifty Open Flat; TCS Dips 6% Post Q2 Results

Mon, 11 Oct 09:30 am

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Asian stock markets climbed today, helped by a rally in Japan, while traders also weighed the resilience of the pandemic recovery to an energy crunch and the prospect of tighter monetary policy to fight inflation.

The Hang Seng and the Shanghai Composite are trading up by 2% and 0.4%, respectively. The Nikkei is trading higher by 1.5%.

In US stock markets, Wall Street indices ended lower on Friday with technology stocks under pressure as bond yields rose after a monthly report on the labor market came in much weaker than expected.

The Dow Jones Industrial Average fell 9 points, or less than 0.1%, while the technology-focused Nasdaq Composite Index lost 75 points, or 0.5%.

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

All eyes will be on TCS, after the company announced its earnings on Friday after the market hours.

Apart from that, market participants will also focus on the listing of Aditya Birla Sun Life AMC at 10 AM today. The IPO was subscribed 5.25 times and the issue price has been fixed at Rs 712 per share.

The BSE Sensex is trading down by 42 points. Meanwhile, the NSE Nifty is trading lower by 4 points.

Maruti Suzuki is among the top gainers today. TCS and Wipro, on the other hand, are among the top losers today.

The BSE Mid Cap index has opened up by 0.2%. The BSE Small Cap index is trading higher by 0.6%.

Sectoral indices are trading on a mixed note with stocks in the IT sector and telecom sector witnessing selling pressure.

Power stocks and automobile stocks, on the other hand, are trading in green.

Shares of Solar Industries and Uflex hit their 52-week high today.

The rupee is trading at 75.08 against the US$.

Gold prices are trading down by 0.2% at Rs 46,920 per 10 grams.

Crude oil prices rose today, extending multiweek gains, amid supply restraint from major producers and growing demand for fuels as economies try to recover from the coronavirus pandemic.

Speaking of stock markets, in his latest video for Fast Profits Daily, India's #1 trader, Vijay Bhambwani discusses whether you should buy silver ETFs.

Tune in to the video below to find out more:

In news from the energy sector, Reliance Industries is among the top buzzing stocks today.

Reliance New Energy Solar, a wholly owned subsidiary of Reliance Industries, has acquired REC Solar Holdings from China National Bluestar Co.

According to a statement, the transaction is for an enterprise value of US$771 m.

This is the first major renewable energy deal where an equipment manufacturing facility has been acquired.

In other recent deals, such as the ones between Adani and SB Energy Corp., renewable energy projects or companies that have installed power generation capacity were involved.

The RIL-REC deal is in line with what Ambani had said at his company's 44th annual general meeting.

While REC Group is based out of Norway, it was controlled by the Chinese government-owned China National Chemical Corporation (ChemChina) that holds 79.5% stake in China National Bluestar Co.

This deal is not the only one that Reliance made in the last couple of days. Reliance is on an acquisition spree.

Within hours of announcing acquisition of REC Solar Holdings, Reliance Industries announced on Sunday that its subsidiary will acquire a 40% stake in Sterling & Wilson Solar through a combination of primary investment, secondary purchase and open offer for around Rs 28.5 bn.

Reportedly, this acquisition will help Reliance to make inroads into middle east markets where Sterling & Wilson Solar has a strong presence.

Sterling's stake was on sale after the SP group defaulted on bank loans and was facing a severe liquidity crisis. As part of its one-time debt restructuring plan, SP group was to sell assets and utilise the proceeds to repay banks.

The stock market already seems to have factored in Reliance Industries' deals as the company was the biggest gainer last week. Last week, the market valuation of Reliance Industries zoomed Rs 938.2 bn to reach Rs 16,931.7 bn.

Reliance Industries share price has opened the day up by 1.5%.

Moving on to news from the PSU space, the government's final move to privatize national carrier Air India has given a fresh lease of life to its strategic disinvestment plan.

The Department of Investment and Public Asset Management (DIPAM), which oversees the disinvestment policy, is now planning to cede management control over a dozen public sector undertakings (PSUs) in the next six months.

Sources said the successful culmination of the Air India disinvestment process has upped investor interest in picking up management control of PSUs put on the block for privatisation.

Overseas investors are also looking at the country's disinvestment plan with interest.

As a result, the strategic disinvestment proposals of companies such as Ferro Scrap Nigam (FSNL), Rashtriya Ispat Nigam, Container Corporation of India, IDBI Bank and Neelanchal Ispat Nigam may get a fresh lease of life.

The government is also seeing an increased interest of foreign investors in the proposed IPO of the Life Insurance Corporation (LIC), which is likely to be floated soon.

The government has a list of 34 PSUs that have been given 'in principle' approval for disinvestment. These include Scooters India, Bridge and Roof Co., Cement Corporation of India and Pawan Hans.

It remains to be seen how the government completes its ambitious budgeted target of Rs 1.75 lakh crore in 2021-22.

Speaking of PSUs, have a look at the chart below which shows the performance of BSE PSU index compared to BSE Sensex over the past few years.

As can be seen from the chart above, over the last decade, Rs 100 invested in BSE PSU index would have eroded to Rs 80, compared to almost 3x gains for the Sensex.

Here's what Richa Agarwal, lead Smallcap Analyst at Equitymaster, wrote about PSU stocks in one of the edition of Profit Hunter...

• However, it will be folly to paint all PSUs with the same brush. There are some exceptions in this space, which put their private peers to shame.
  
  In a recent editorial, I shared an opportunity in a PSU stock that is riding and enabling an irreversible megatrend - digitisation.

One of Richa's stock recommendation is a PSU stock. This smallcap PSU is leading the digitisation drive from the frontlines.

Richa believes it could be a perfect bet for these uncertain times. Hidden Treasure subscribers can read the recommendation here.

And if you're not a subscriber, here's where you can sign up.

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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