Sensex Trades Lower Tracking Weak Global Cues; Paytm Shares Make Tepid Debut and List at Discount

Thu, 18 Nov 10:30 am

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Asian stock markets are lower today as investors took cues from Wall Street falls on profit-taking and their focus shifting to the expected announcement this week of new stimulus in Japan.

The Nikkei plunged 0.8% while the Hang Seng fell 1.4%. The Shanghai Composite dropped 0.2%.

In US stock markets, Wall Street indices ended lower on inflation fears and supply chain concerns stemming from retailers' earnings.

The Dow Jones Industrial Average tanked 0.6% while the Nasdaq declined 0.3%.

Back home, Indian share markets are trading on a flat note.

The BSE Sensex is trading down by 178 points. Meanwhile, the NSE Nifty is trading lower by 69 points.

Bajaj Finance and Bajaj Finserv are among the top gainers today. HCL Tech, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index are trading lower by 0.6% and 0.4%, respectively.

Barring finance, all sectoral indices are trading in red with stocks in the pharma sector and metal sector witnessing most of the selling.

Shares of Solar Industries and Trident hit their 52-week highs today.

The rupee is trading at 74.19 against the US$.

Gold prices are trading down by 0.2% at Rs 49,207 per 10 grams.

Meanwhile, silver prices are trading down by 0.4% at Rs 66,390 per kg.

Crude oil prices came under pressure, adding to an overnight plunge on reports that the United States was asking major oil consumers like China and Japan to consider a coordinated release of oil reserves to lower prices.

Speaking of stock markets, Brijesh Bhatia shares his views on learning artificial intelligence (AI) tools for trading, in his latest video for Fast Profits Daily.

In news from the electric vehicles (EV) space, encouraged by the demand for EVs in the last mile delivery segment, Tata Motors will be launching an EV model for the segment soon.

It is working with e-commerce companies to understand their requirements with regards to range and performance, said Girish Wagh, executive director, commercial vehicle business unit, Tata Motors.

He added that the company is also in the works for the cargo segment.

Here's what he told at a round table conference:

• With increasing awareness of EVs, there is a good pull for EV offering in the last mile delivery segment. We have studied the sector in detail and are looking to deliver a solution and not just a vehicle.
  
  While the launch is still some months away, we are already working with some end users to understand their needs.

Note that its rival Ashok Leyland also has plans to launch EV offerings in the last mile delivery segment. Its EV arm, Switch Mobility, will be launching its first electric light commercial vehicle (e-LCV) in India by the end of December. For this, it has secured 2,000 orders.

The group has plans to invest US$150-200 m in the EV space in the next few years.

Meanwhile, with an improved availability of CNG and high diesel prices, Tata Motors has seen demand for CNG powered vehicles go up substantially in the segments between 5 tonnes to 16 tonnes. It now accounts for 41% of total sales.

Shares of Tata Motors are currently trading lower by 2.6%.

Speaking of EVs, have a look at the chart below which shows the massive opportunity in the two-wheeler EVs.

Here's what lead Smallcap Analyst at Equitymaster, Richa Agarwal wrote about this in a recent edition of Profit Hunter:

• In the last five years, two-wheeler sales in India were around 2 crore units per year. Now the sector is cyclical and has been in the downturn for some time. So let's consider a moderate 5% growth for the next 10 years.
  
  By 2030, we are looking at 2-wheeler sales of 3 crore units. Even if one third of this is EV sales, that's 1 crore electric 2-wheelers per year.
  
  In the last 2 years, average electric 2-wheeler sales were 1.5 lakh units. From 1.5 lakh to 1 crore, that's a 66x opportunity in 2-wheeler EVs.
  
  This is an annual growth rate of 52% over next 10 years. It's an almost vertical growth opportunity.

As per Richa, this is like a gold rush. But like in any gold rush, the winners will just be a few.

Moving on to news from the IPO space, market participants are closely tracking shares of One97 Communications, the parent company of Paytm, as it made its Dalal Street debut today.

Shares of Paytm made a weak debut and got listed at a loss of over 9% below their issue price on the stock exchanges.

The scrip got listed at Rs 1,950.00 apiece on the National Stock Exchange (NSE).

India's largest ever IPO worth Rs 183 bn was open for subscription between 8-10 November in the price range of Rs 2,080-2,150 per shares.

Meanwhile, Sapphire Foods India, the operator of QSRs like KFC, Pizza Hut and Taco Bells in India, Sri Lanka and Maldives also made its debut.

In other news, the huge profits that private equity (PE) investors are making from the sale in a number of recent IPOs from startups has come under the lens of India's markets regulator.

The regulator has noted that these investors buy shares of startups at low prices and subsequently sell them at eye-popping valuations through IPOs.

To enhance transparency in disclosures, the regulator now wants merchant bankers to clearly state the cost of acquisition of large investors such as PEs in IPO advertisements.

In a communique to merchant bankers on Wednesday, here's what the regulator said:

The risks to investors shall include weighted average cost of acquisition of all shares transacted in the last three years and one year, from the date of RHP (red herring prospectus).

The regulator further said the portion pertaining to risk to investors shall constitute at least 33% of the price band advertisement space.

Reports state that this move will help for individual investors to get a sense on the entry and exit pricing of institutional and large investors after concerns were raised on recent startup IPOs fetching lofty valuations.

This will also help small investors get an idea about their entry price as most of these companies are currently loss making.

Note that around half a dozen new age companies have launched their IPOs in recent months. The institutional investors' acquisition cost was one-third of their selling price via IPOs.

The demand for shares of some these companies has been huge. Take for example Nykaa and Zomato their offers saw substantially higher bids in the public offer.

Similarly, Policybazaar, Easy Trip and CarTrade received higher bids.

We will keep you updated on the latest developments 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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