Sensex Ends Flat; PSU Banks and Consumer Durable Stocks Witness Buying

Fri, 20 Dec Closing

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Share markets in India witnessed volatile trading activity throughout the day and ended on a flat note.

Sectoral indices ended on a mixed note with stocks in the healthcare sector, automobile sector and energy sector witnessing selling pressure, while consumer durable stocks and telecom stocks witnessed buying interest.

At the closing bell, the BSE Sensex stood higher by 8 points while the NSE Nifty closed up by 12 points. The BSE Mid Cap index ended the day up by 0.2%, while the BSE Small Cap index ended the day down by 0.1%.

The rupee was trading at 71.15 against the US$.

Speaking of Indian share markets, in the video below, Rahul Shah talks about the one important chart all investors should see before making a big investment in 2020.

In latest developments from the IPO space, the initial public offer of Prince Pipes and Fittings was subscribed 2.01 times at the time of writing, on its final day of bidding.

Exchange data showed that the Rs 5 billion public issue received bids for 39.9 million equity shares against offer size of 19.7 million shares (excluding anchor book).

Note that the polymer pipes and fittings manufacturer already raised Rs 1.5 billion from eight anchor investors on December 17, the day before issue opened for subscription on December 18.

Prince Pipes and Fittings is one of India's leading pipe and fitting manufacturers.

It has 5% share in the organized market and was the sixth largest player in terms of sales at the end of FY19.

The fresh issue money and proceeds from the pre-IPO placement would be used for repayment of certain outstanding loans, financing the project cost towards establishment of a new manufacturing facility and upgradation of equipment at company's manufacturing facilities.

In other news, private equity firm Oman India Joint Investment Fund (OIJIF) has picked up a 5% stake in Prince Pipes and Fitting for Rs 1 billion in the ongoing initial public offering of the company.

The PE investor, which counts Oman's sovereign wealth fund State General Reserve Fund of Oman and India's biggest lender State Bank of India as its sponsors, picked up the stake through participation in the anchor allocation one day ahead of the opening of the IPO, as well as through a secondary purchase of shares from the company's promoters.

Documents filed by the company show that OIJIF invested Rs 0.5 billion in the anchor book of Prince Pipes IPO, while it bought the remaining stake worth Rs 0.5 billion in a secondary purchase from promoters.

How this IPO sails through remains to be seen. Stay tuned for more updates from this space.

Speaking of the Indian pipes and fittings industry, the chart below reveals one of the biggest reasons why this industry has a long growth story ahead...

A Big Opportunity Beyond the Current Slowdown

Here's what Ankit Shah wrote about it in a recent edition of The 5 Minute WrapUp...

• India has very low per-capita plastic consumption of about 11 kg, compared with the global average of 30 kg. Traditional materials dominate the application areas of plastic.
  
  However, over the past three to four years, low crude oil prices and superior properties of plastic have increased the usage of plastic in India. Hence, India's per-capita consumption is expected to increase towards the global average.
  
  Given this background, the IPO of Prince Pipes and Fittings looks interesting to me. I'm going to analyse this IPO and recommend my Insider readers whether to apply for it or not.

Ankit has shared a detailed note on this IPO with his readers at Insider. You can read the same here (subscription required): Prince Pipes and Fittings: Another Rs 500 Crore IPO

Moving on to news from the banking sector, Yes Bank share price was in focus today.

Stock of the lender climbed as much as 8% today amid buzz that the private lender was likely to announce its much-awaited qualified institutional placement (QIP) soon.

Despite being downgraded by rating agencies, shares of Yes Bank continued to rally, extending gains to the second day.

Earlier this week, India Ratings and Research (Ind-Ra) had downgraded Yes Bank's Long-Term Issuer Rating from "A+" to "A", owing to inadequate and slow equity infusion. The fresh capital is critical for providing sufficient cushion for the credit cost impact of its stressed asset pool.

Ind-Ra considered equity infusion of US$ 1-1.2 billion in the next few weeks.

In a similar move, ICRA had also downgraded rating on Yes Bank's tier-II bonds from "A+" to "A". The downgrade was on the basis of continued uncertainty regarding the timing and extent of capital raise.

Note that the private bank on December 13 said the third quarter would remain subdued and there would be an improvement in the revenue in the March quarter on the back of government measures.

In a note, Yes Bank said that muted demand environment amid economic slowdown weighed on corporate earnings during the second quarter of 2019-20, with an aggregate revenue recording a contraction of 3.5% year-on-year (YoY) compared to an expansion of 3% in the preceding quarter of the financial year.

How the above developments pan out remains to be seen. 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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