Rising Gold Prices, Tweak in Norms for Insolvent Companies, and Buzzing Stocks Today

Fri, 18 Dec Pre-Open

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Indian share markets ended higher yesterday, taking the winning streak to the 5th day.

At the closing bell yesterday, the BSE Sensex stood higher by 224 points.

The NSE Nifty stood higher by 58 points.

The Sensex hit an all-time high of 46,992 and Nifty logged a lifetime high of 13,773 in yesterday's session.

HDFC and Bajaj Finance were among the top gainers. ONGC, on the other hand, was among the top losers.

The BSE Mid Cap index ended down by 0.1%. The BSE Small Cap index ended lower by 0.2%.

Sectoral indices ended on a mixed note with stocks in the capital goods sector and finance sector witnessing buying interest.

Metal stocks and oil & gas stocks, on the other hand, witnessed selling pressure.

Sugar stocks were in focus yesterday after the Union Cabinet approved Rs 35-billion sugar export subsidy. The central government on Wednesday approved a subsidy to sugar mills for the export of around six million tonnes (MT) in the ongoing 2020-21 marketing season that started in October.

Shares of Balrampur Chini, Triveni Engineering Industries, Uttam Sugar Mills, Dhampur Sugar Mills, Shree Renuka Sugars, EID Parry (India) and Dwarikesh Sugar Industries gained in the range of 3-5%.

Gold prices on MCX rose 1.1% to Rs 50,126 per 10 grams at the time of closing stock market hours yesterday.

In global markets, gold rates were steady near a one-week high, supported by hopes that US lawmakers will soon make progress towards a fiscal stimulus deal and a weak dollar.

US Federal Reserve's pledge to keep rates low until an economic recovery is secure also helped to support gold rates.

In one of his latest videos, India's #1 trader, Vijay Bhambwani shares his view on gold and silver for the coming year.

In the video, Vijay explains the reasons behind staying positive on these assets.

Tune in here to find out more:

And to know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Top Stocks in Focus Today

Among the buzzing stocks today will be Divi's Laboratories.

Divi's Laboratories on December 17 crossed Rs 1 trillion in market capitalisation, the second Indian pharmaceutical company to do so, with shares surging 103% so far this year.

Currently, Divis Laboratories stands at the 30th position among companies having a market capitalization of over Rs 1 trillion. It is the second most valued pharmaceutical company after Sun Pharmaceuticals, which has a market capitalization of Rs 1.4 trillion

Burger King India share price will also be in focus today. The stock of the company, which made a stellar debut at the bourses on Monday, surged 10% yesterday, taking its gains to 265% over the issue price, after just four days of its listing on the stock exchanges. However, stock of the company witnessed profit booking as the script ended lower by 10%.

Market participants will also track Cipla share price as the company announced its partnership with the Premier Medical Corporation for commercialization of the rapid antigen test kits for COVID-19 in India.

The company said it will commence supply of rapid point-of-care nasopharyngeal swab tests from this week.

Tweak in Norms for Insolvent Companies, Mutual Funds and FPO

In news from the financial markets, the Indian stock markets regulator tightened the public shareholding norms for listed companies and eased the rules for entities that wish to launch mutual fund business in the country.

Following a board meeting, the regulator amended norms related to minimum public shareholding norms for listed companies that are going through corporate insolvency resolution process (CIRP).

The market watchdog said that CIRP-bound companies need to maintain a public shareholding of at least 5% to be able to qualify for trading of their shares on stock exchanges.

At present, during CIRP, if the public shareholding falls below 10%, they can continue to have their shares traded on exchanges but are required to bring the public shareholding to at least 10% within a period of 18 months and to 25% within 36 months.

In another move, the regulator has eased the eligibility norms for entities who intend to launch mutual fund companies.

In a bid to enhance the penetration of MFs in the country, the regulator said that even loss-making entities can launch or become sponsors of mutual fund companies as long as such entities have a net-worth of at least Rs 1 billion.

This net-worth of the AMC has to be maintained till the time the AMC makes profit for five consecutive years, it added.

The regulator has also directed all mutual funds to segregate and ring-fence all assets and liabilities of each MF scheme from other schemes of the mutual fund.

Mutual funds are no longer required to issue physical unit certificates.

The market regulator has also done away with the applicability of minimum promoters' contribution and the lock in requirements for companies making further public offers (FPOs).

The regulator said that such an exemption will be available to a company only if its shares have been frequently traded on a stock exchange for at least three years, and if it has redressed at least 95% of the complaints received from the investors.

What effects the above norms have on Indian stock market remains to be seen.

IndusInd Bank Promoters Get One Month Extension to Infuse Remaining Capital

Private lender IndusInd Bank said the market regulator has granted a one-month extension for its promoters to infuse residual capital in lieu of conversion of warrants, issued to them last year, worth over Rs 26.9 billion into equity.

IndusInd Bank had issued convertible warrants to its promoters - IndusInd International Holdings (IIHL) and its subsidiary IndusInd (IL) on July 6, 2019, under the composite scheme of arrangement for a total amount of Rs 26.9 billion for 15.7 million share warrants.

The promoters had paid Rs 6.7 billion towards the warrant subscription for 25% of the warrant price of Rs 1,709 per share.

An amount of Rs 20.2 billion was to fall due on January 5, 2021, for the conversion of warrants into equity shares. In view of the present uncertain times due to disruption caused by the Covid-19 pandemic, the bank had, at the request of IIHL and IL, approached the market regulator for an extension in time for payment of the balance amount.

The market regulator then granted an extension of one month for the subscription to the warrants, i.e., until February 4, 2021, to complete the said conversion into equity.

The promoters in a letter to the bank have reiterated their commitment to the subscription to the remaining warrants to complete the conversion into equity. They subscribed to convertible warrants at a price of Rs 1,709 per share when the market was hovering at Rs 1,470 per share.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

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

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