Sensex Ends 207 Points Lower as Metal & Banking Stocks Witness Selling; Axis Bank Tanks 7%

Wed, 27 Oct Closing

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Indian share markets witnessed volatile trading activity during closing hours today and ended lower.

After trading in a range throughout the session, benchmark indices slipped into red during closing hours as select financial and banking stocks extended losses.

At the closing bell, the BSE Sensex stood lower by 207 points (down 0.3%).

Meanwhile, the NSE Nifty closed lower by 57 points (down 0.3%).

Asian Paints and UPL were among the top gainers today.

Axis Bank and Bajaj Finance, on the other hand, were among the top losers today.

The SGX Nifty was trading at 18,250, down by 64 points, at the time of writing.

The BSE Mid Cap index ended on a flat note, while the BSE Small Cap index ended up by 0.3%.

Sectoral indices ended on a negative note with stocks in the metal sector, banking sector and energy sector witnessing most of the selling pressure.

IT stocks, on the other hand, witnessed buying interest.

Shares of SBI and TCI Express hit their respective 52-week highs today.

Asian stock markets ended on a negative note today.

The Hang Seng and the Shanghai Composite ended down by 1.6% and 1%, respectively. The Nikkei ended on a flat note in today's session.

US stock futures are trading on a flat note today with the Dow Futures trading down by 29 points.

The rupee is trading at 75.02 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.2% at Rs 47,729 per 10 grams.

Speaking of stock markets, Brijesh Bhatia shares his short-term view on the Nifty, in his latest video for Fast Profits Daily.

Brijesh believes, despite the recent bearishness in the market, the Nifty is still in a bullish trend. In other words, the bulls are still in control of the Nifty.

Tune in to the video below to find out more:

In news from the real estate sector, IRB Infra was among the top buzzing stocks today.

Shares of IRB Infrastructure Developers (IRB Infra) were locked at the 10% lower circuit at Rs 265 on the BSE today after the company's board approved fund raising of up to Rs 53.5 bn by issuing 252.5 m equity shares through preferential issue on a private placement basis.

The issue price for the preferential allotments is Rs 211.8 per share, a 21% discount to today's closing price of Rs 265 on the BSE.

IRB Infra has announced two separate equity fundraise through preferential allotments to Cintra, an arm of Spanish infrastructure major Ferrovial and Singapore's GIC.

According to the deal details, Cintra would invest equity capital of up to Rs 31.8 bn and will have a maximum stake of 24.9% in IRB post investment.

On the other hand, GIC (through its affiliate) would invest equity capital of up to Rs 21.7 bn into IRB for a maximum stake of up to 16.9% in IRB post investment.

The total investment proceeds from these investments will be a maximum of Rs 53.5 bn, making it the biggest equity fundraise by a listed Indian road firm.

The proceeds are likely to be utilised for deleveraging of the corporate level debt of Rs 32.5 bn, growth capital for current and future opportunities (Rs 15 bn) and general corporate purposes (Rs 6 bn).

Virendra D Mhaiskar, the founder promoter of IRB will continue as the promoter and single largest shareholder post completion of the transactions with an approximate 34% stake and will retain management control of IRB.

This equity fundraise will help achieve the twin objectives of deleveraging and access to growth capital to participate in the massive infrastructure development and monetization plan of the government of India.

IRB Infra share price ended the day down by 10% on the BSE.

To know more, check out IRB Infra's 2020-21 annual report analysis.

Speaking of the current stock market scenario, note that the BSE smallcap index has surged more than 180% since the crash in March 2020.

Despite the index being up more than 1.8 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2021 and beyond.

Here's why...

The Smallcap to Sensex ratio, a metric referred to get a sense of relative valuations, currently stands at 0.48 times. To be sure, this is higher than a median of 0.43 times.

And yet, it's the lowest of all the peaks in the smallcaps so far. In the last cycle which peaked in January 2018, when the ratio touched 0.49, the peak was still 9 months away.

Here's what Richa wrote in one of the editions of Profit Hunter...

• When it comes to buying smallcap stocks, especially at this point in the rebound rally, you will need a bottom up approach, and a long term horizon.
  
  In fact, if you don't have the stomach to withstand a 20%-30% kind of corrections and volatility, this space may not be for you at all. And you should stop reading right here.

As per Richa, smallcaps are a great opportunity to make some big returns. But you need to stay disciplined when it comes to allocating money. And you need to be sharp when picking the right stocks.

Moving on to news from the IPO space...

Paytm Hikes Issue Size to Rs 183 bn

With weeks to go for its initial public offering (IPO), Paytm has hiked its issue size to Rs 183 bn from the originally planned Rs 166 bn.

The increased portion will all come in the offer-for-sale (OFS) component with existing shareholders selling more of their shares.

The size of the primary offering will remain unchanged at Rs 83 bn, while the secondary sale size will now be Rs 100 bn.

The biggest IPO in the history of Indian capital markets so far has been that of Coal India (CIL), which raised Rs 154.8 bn in 2010.

The Paytm issue which is expected to hit the market next month, will see the shares of One 97 Communications (Paytm's parent company) being listed both on the BSE and the NSE

Even before the increase in size, Paytm's offering was the largest in India.

According to sources, Paytm has decided to hike the issue size after receiving feedback that there is enough of an appetite for the company's shares at the right price.

Nearly half of the offer for sale is by Ant Financial and the remaining by Alibaba, Elevation Capital, SoftBank and other existing shareholders.

Investment bankers are understood to have advised the company to offer the shares in a price band to enable price discovery.

How this IPO sails through remains to be seen.

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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