Indian Indices Witness Selling, Home First Finance IPO, and Top Cues in Focus Today

Mon, 2 Dec Pre-Open

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India share markets witnessed huge selling pressure on Friday and ended their day deep in the red.

At the closing bell on Friday, the BSE Sensex stood lower by 336 points (down 0.8%) and the NSE Nifty stood down by 95 points (down 0.8%).

On the other hand, the BSE Mid Cap index ended the day up 0.2%, while the BSE Small Cap index ended the day up by 0.5%.

Sectoral indices ended on a mixed note. Stocks in the energy sector and metal sector witnessed huge selling pressure, while telecom stocks were trading in the green.

Speaking of the Sensex's fall witnessed on Friday, note that the past few months have seen stock markets trading on a volatile note. While the Sensex has been rising, the rest of the market has seen most stocks falling. And even the Sensex's rise has been topsy-turvy.

But isn't that how markets have always behaved?

If you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

Here's what Radhika Pandit wrote about this in one of the editions of The 5 Minute WrapUp...

• If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.
  
  Sarvajeet and I believe we are seeing a similar situation currently.
  
  The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

So, the real question is - Are you taking advantage of these market movements to buy quality stocks?

Also, amid such volatile times, Tanushree Banerjee talks about the trends and stocks that have huge profit potential.

One of the trends she talks about is the privatisation of PSUs. She talks about the huge potential of this sector and the stocks that could be the big winners!

Tune in to find out more...

Top Stocks in Focus Today

From the pharma sector, Aurobindo Pharma share price will be in focus today as the company's subsidiary Auro Vaccines LLC has entered into a pact to acquire certain business assets from Profectus BioSciences Inc USA for an upfront cash consideration of US$ 11.3 million (around Rs 800 million) with potential earn-outs on achieving certain milestones.

From the finance sector, shares of Indiabulls Housing Finance will also be in focus today as the government filed an affidavit in the Delhi High Court saying there are no irregularities in the housing finance company as far as loans given to some of the entities.

The affidavit filed by the ministry of corporate affairs (MCA) stated that "as far as the loans given by IBHF to five companies - DLF, Amricorp, Vatika, ADRG and Chordia reported to be Standard Accounts. Remaining issues/violations reported in the inspection report are under examination and same will be dealt as per law."

Note that a writ petition filed by an NGO on September 6, alleged that the Indiabulls group misappropriated thousands of crores of rupees through complex transactions.

The petition alleged that the Indiabulls group roundtripped the funds through complex transactions involving entities in the Reliance Anil Ambani Group and the DLF Group and has urged the court to initiate an independent investigation by a special investigation team to inquire into the allegations of financial irregularities by the Indiabulls conglomerate.

From the IPO Space...

In the news from the IPO space, Home First Finance Company (HFFC) filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) on Friday for its proposed initial public offering (IPO).

The housing finance company is expected to raise Rs 15 billion through the public issue.

The IPO comprises a fresh issue of Rs 4 billion and Rs 11 billion offer for sale by promoters and investors.

The prospectus of the company also states that it may consider a pre-IPO placement of up to Rs 1.6 billion in consultation with merchant bankers. If the pre-IPO placement is undertaken, the amount will be reduced from the fresh issue.

The company intends to utilise the net proceeds from the fresh issue for augmenting its capital base to meet requirements arising out of the growth of business and assets.

Speaking of IPOs, the year 2019 hasn't seen much activity in the IPO market. Since the start of the year, there have been just 13 IPOs on the BSE main board.

Even the ones that hit the primary markets were mostly small to mid-sized IPOs. And no mega IPOs.

The total amount raised through IPOs has shrunk to Rs 107.2 billion in 2019, a third of the Rs 309.6 billion raised in the previous year.

Very few companies come out with IPOs during bearish market conditions. So, when the IPO market is sluggish, you must take that as an indicator of market sentiment and liquidity conditions.

However, it is interesting to note that despite the tepid market conditions, most of the companies gave positive listing day gains.

In fact, if you had invested in each one of them and held them till now, your gains would have been even better. In fact, 10 of the 13 companies have delivered positive returns.

So, unlike bull markets wherein selling shareholders do their best to squeeze the highest price, volatile and bear markets often offer fantastic opportunities to spot great companies and get onboard early on.

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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