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India's Third Giant Leap

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Realty & auto lead the gains
Thu, 26 Nov Closing

Indian equity markets continued to trade strong as the indices end the day on a high note. The BSE-Sensex today closed higher by around 183 points, while the NSE-Nifty saw an increase of around 53 points. BSE Mid Cap and BSE Small Cap indices fared well too gaining 0.3% and 0.5% respectively. Gains were largely seen in realty and auto sector.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.49%, while the Shanghai Composite led the Hang Seng lower. They fell 0.34% and 0.04% respectively. European markets are higher today with shares in Germany leading the region. The DAX is up 0.60%, while France's CAC 40 is up 0.25% and London's FTSE 100 is up 0.22%. The rupee was trading at 66.55 against the US$ in the afternoon session.

According to a leading financial daily, IDBI Bank has launched a US$ 350 million 5 year Reg S Green Bond issue on November 23, 2015. The issue was oversubscribed by 3 times. The issue was made under the US$ 5 billion MTN Programme listed on the Singapore Stock Exchange.

The transaction attracted interest from a diversified range of investors including Asset Managers (50%), Banks (28%), Private Banks (17%), Corporates, and Others (5%). Around 82% of the allocation was made to Asian Investors, 18% to European investors. ANZ Bank, BNP Paribas, Citibank, EISBC, JP Morgan Chase and Standard Chartered Bank acted as Joint Book Runners and Lead Managers to the transaction.

IDBI Bank has become the first state-owned commercial bank to raise US$ 350 million by selling green bonds. The proceeds are used for refinancing of clean energy projects in India which include wind energy, solar energy, energy distribution and management system. The shares of IDBI Bank finished the day on an encouraging note (up 1.5%) on the BSE.

IDBI Bank has been in news of late for the government's privatization plans. Vivek Kaul, co-author of The Daily Reckoning, recently pointed out how the plans to privatise IDBI Bank and turn it into an Axis Bank -like entity could be a test for the Modi government.

According to leading economic daily, US private-equity firm Bain Capital is set to exit Hero MotoCorp by selling its residual stake for Rs 8 billion (US$ 116 million) in the Indian two-wheeler maker in a block deal.

Reportedly, Bain has around 1.5% stake, or 2.9 million shares in Hero MotoCorp. The indicative price band is expected to be between Rs 2,570 and Rs 2,600.

In March 2011, Bain Capital had invested US$ 550 million for an 8.6% stake in Hero Investment Pvt Ltd. The money was used by the Hero Group to buy out Honda's 26% stake in Hero Honda Motors Ltd. Since then Bain has sold Hero MotoCorp shares in the market twice for Rs 40 bn.

It has been an uninspiring year for Hero MotoCorp. The stock price of the company has fallen around 16% in last one year. With increase in competition and decrease in rural demand, Hero MotoCorp's market share has fallen below 40% for the first time in 11 years. In our recent edition of the '5 Minute WrapUp', we have discussed the factors that have hit the company and what it means from an investment perspective.

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