Saudi Aramco IPO, OPEC's Crude Oil Output Cut, and Top Cues in Focus Today

Mon, 9 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 334 points (down 0.8%) and the NSE Nifty stood down by 96 points (down 0.8%).

The BSE Mid Cap index ended down 1.3%, while the BSE Small Cap index ended down by 0.9%.

Stocks in the auto sector and banking sector witnessed huge selling pressure, while telecom stocks were trading in the green.

Top Stocks in Focus Today

From the banking sector, RBL Bank share price will be in focus today as the private lender has raised Rs 20.3 billion from institutional investors through a qualified institutional placement offering (QIP) and will utilize the proceeds to fund business growth.

The bank has successfully concluded the QIP at an issue price of Rs 351 per share pursuant to the allotment of 57.7 million equity shares.

Andhra Bank share price will also be in focus today as the Reserve Bank of India (RBI) imposed a penalty of Rs 25 lakh on the lender on Friday.

Andhra Bank was fined for failing to comply with RBI's directions on know your customer (KYC) norms, anti-money laundering standards and opening of current accounts.

Saudi Aramco Raises US$ 25.6 Billion on IPO Launch

In news from the IPO space, Saudi Arabia's state oil company Aramco launched its initial stock offering on Thursday, raising US$ 25.6 billion.

The sum raised by the oil giant surpasses the US$ 25 billion garnered by the Chinese online trading group Alibaba in 2014 when it entered Wall Street.

Saudi Aramco is now the world's most valuable listed firm with market valuation of US$ 1.7 trillion, overtaking Apple (US$ 1.2 trillion), Microsoft and Alibaba (US$ 1.1 trillion).

Sources said that Aramco is expected to begin trading December 12 on the Tadawul exchange in Riyadh at 32 riyals, or US$ 8.53.

The IPO still falls short of the towering US$ 2 trillion valuations long sought by Crown Prince Mohammed bin Salman.

Earlier, sources told Reuters that Aramco may also exercise a 15% "greenshoe" option, allowing it to increase the size of the deal to a maximum of US$ 29.4 billion.

Aramco's market debut is intended to help diversify Saudi Arabia's economy away from its overwhelming reliance on petroleum.

Note that Saudi Aramco's much heralded and oft-delayed initial public offering is going ahead, albeit in a scaled down version of the original plan by Saudi Crown Prince Mohammed bin Salman.

There'll be no grand opening on the London or New York stock exchanges. The sale is restricted to the Saudi bourse and won't even by marketed to most international money managers.

Investors will be able to purchase just 1.5% of the world's most profitable company, about half what was previously considered.

So, what does all that mean for crude oil investors and traders?

At a time when Saudis are not sharing many details with their wall street investment bankers, Vijay Bhambwani in one of his recent videos, raises a few questions that the mainstream media is not covering, and not even crude oil traders are asking...

Tune in to find out...

OPEC and Allies Agree to Deepen Oil Output Cuts

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia agreed one of the deepest output cuts this decade to support crude prices and prevent a glut but were still debating how long the curbs would last next year.

For the aforesaid cuts, OPEC has discussed supply policy in Vienna and is also meeting with Russia and other producers, a grouping known as OPEC+.

The members will consider how to balance their supply with another year of rising output from the United States in 2020. Other non-OPEC countries such as Brazil and Norway are also expected to pump more oil.

Russian Energy Minister Alexander Novak said a panel of key energy ministers including Saudi Arabia and Russia had recommended the OPEC+ group deepens existing supply curbs of 1.2 million barrels per day by another 500,000 bpd.

The cut of 1.7 million bpd would amount to 1.7% of global crude oil supply.

He said cuts would last through the first quarter of 2020, a much shorter timeframe than suggested by some OPEC ministers, who have called for extending cuts until June or December 2020.

OPEC+ has agreed voluntary supply cuts since 2017 to counter booming output from the shale fields of the United States, which has become the world's biggest producer.

JLR November US Sales

Tata Motors' wholly owned subsidiary, Jaguar Land Rover (JLR) reported November 2019 US sales. Jaguar Land Rover total November US sales reached 12,472 units, up by 6% from November 2018.

For the calendar year, Jaguar Land Rover achieved 111,895 units, an increase of 3% against 108,377 units in 2018.

For the month of November, Jaguar sales were 2,958 units, 7% lower than a year ago. The Jaguar F-PACE continued to lead the brand's sales performance with 1,787 units sold.

For the month of November, the Land Rover brand sold 9,514 units, an increase of 11% from 8,547 units in November 2018. The Discovery is up by 51% with 1,081 units sold.

It remains to be seen how these numbers pan out in the coming months. We will keep you updated on all the news from this space.

Speaking of auto sector, note that India's automobile industry is bracing itself for a unique challenge in the first quarter of 2020 when the transition of BS-IV to BS-VI emission norms has to be made at the stroke of midnight on 31 March 2020.

No BS-IV vehicle could be sold from 1 April 2020, which means automakers would have to reduce their inventory on BS-IV models to zero by then.

The exercise is likely to see companies show extra caution in dispatching cars to dealers in the next few months, which may cause a continuation of the decline in wholesale numbers.

However, despite the slowdown in the auto sector, the sales volume of electric vehicles (EVs) are growing at a robust pace.

Electric vehicles are very much on their way to invading Indian roads. The threat of disruption in this era is something you cannot ignore.

The recently announced government incentives will give a further boost to EV sales.

The coming one year will be a real test for India's auto companies.

It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.

In our view, companies in the sector adapting their business models to the rapidly changing environment will survive and thrive.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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