Vedanta's Big Acquisition, Shriram Properties' Tepid Debut, and Buzzing Stocks Today

Tue, 21 Dec Pre-Open

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Indian share markets ended deep in the red yesterday.

Benchmark indices extended Friday's losses as the market sentiment was dented amid fears of a severe-than-expected economic impact owing to the Omicron variant, recently announced hawkish policy stances by global central bankers and persistent FIIs selling.

At the closing bell yesterday, the BSE Sensex stood lower by points (down 2.1%).

Meanwhile, the NSE Nifty closed lower by points (down 2.2%).

Cipla and Hindustan Unilever were among the top gainers.

BPCL and Tata Motors, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended down by 3.4% and 3.3%, respectively.

On the sectoral front, finance stocks, oil & gas stocks and realty stocks were among the hardest hit.

Gold prices for the latest contract on MCX were trading down by 0.3% at Rs 48,427 per 10 grams at the time of closing stock market hours yesterday.

Here's What Spooked the Market Yesterday

Omicron scare: India's Omicron count rose to 151 on Sunday after Maharashtra recently reported six more cases.

Globally, the United Kingdom reported over 12,000 confirmed cases of the fast-spreading Omicron variant of the coronavirus, Netherlands went into a complete lockdown on Sunday till at least January-mid and Germany tightened travel restrictions for people coming from Britain.

These steps have soured sentiment on the Street as they pose a potential threat to the economic recovery.

Weak Asian cues: Shares in Asia-Pacific ended lower yesterday, with China slashing its benchmark lending rate for the first time in more than one-and-a-half years.

China announced a cut in its one-year loan prime rate from 3.85% to 3.8% - the first such move since April 2020.

Policy tightening: A major reason that has caused the spiraling effect on the equity markets in Asia is the hawkish stance by the central banks world-wide.

Since the Fed expressed its views on aggressively retreating from its pandemic-led stimulus, several central banks have raised rates to fight inflation in their respective countries.

The bank of England on Thursday became the first major central bank to raise interest rates since the Covid-19 pandemic began.

Norway raised rates for the second time this year on 16 December despite an expansion of Covid curbs, while Russia raised its policy rates for the seventh time this year on 17 December.

New Zealand had also raised its interest rate last month, and Canada has suggested that it will start doing the same soon.

Higher rates in the developed markets lead to FII outflow from emerging markets as the interest rate differential reduces, making the latter less appealing for investors.

Persistent selling by FIIs: The tightening of the policies by the central banks in developed markets has resulted in unabated selling by FIIs in India and other emerging markets.

In December alone, the FIIs have net sold over Rs 260 bn in the cash market, the highest monthly selling this year. On 17 December, they net sold Rs 20.7 bn in the cash market.

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Top Stocks in Focus Today

Among the buzzing stocks today will be power sector stocks.

Central public sector enterprises (CPSEs) from the power sector have registered 45% growth in investment on capital expenditure over the previous year, the power ministry has said.

For the ongoing fiscal 2022, the capex target of the CPSEs, under the Ministry of Power, is Rs 506.9 bn, according to a power ministry statement.

Power sector CPSEs incurred a capex of Rs 221.3 bn till November 2020, which was 49.3% of the total expenditure for the fiscal.

However, it stated that during 2021-22, the CPSEs have so far invested capex of Rs 321.4 bn, which is 63.4% of the annual capex target.

The capex performance of the ministry in absolute as well as relative terms is better compared to the previous year. In absolute terms, it has shown a growth of 45%.

Even in the schemes for infrastructure development, the ministry has been making good progress, a statement issued by the power ministry said.

Vedanta share price will also be in focus today.

Natural resources conglomerate Vedanta has acquired Nicomet, a leading nickel and cobalt producer based in Goa, for an undisclosed amount.

With this acquisition, Vedanta has become India's sole producer of nickel. The move is a step in Vedanta's mission towards making India self-reliant in key critical minerals, a company statement said.

The acquisition of Nicomet is in line with Vedanta's ESG mission and is a step towards supporting India's carbon neutrality goals.

Nickel, a strategic mineral, is a vital input in the manufacturing of stainless steel and batteries for electric vehicles (EVs).

Similarly, cobalt is a key element for lithium-ion battery for EVs, energy storage systems and has other uses like superalloy for steelmaking. Both nickel and cobalt are regarded as the minerals of the future which will play a leading role in transition to renewable and cleaner energy.

India's demand for nickel is currently pegged at 45 kilo-tonnes per annum (KTPA) which is entirely met through imports. At present, Nicomet's plant has a capacity to produce 7.5 KTPA nickel & cobalt.

With an ambitious growth plan in place, Vedanta is poised to meet 50% of the country's total Nickel demand.

Shriram Properties Makes a Tepid Debut on the Bourses

Shriram Properties shares made a weak debut at BSE and NSE yesterday. The realty stock opened at Rs 90 per share levels on NSE, which is 23.7% lower from its issue price of Rs 113 to Rs 118 per equity share.

A day ahead of its listing on the bourses, shares of the south India-based real estate player were trading at a discount of Rs 10-15 in the grey market, signaling towards a muted listing.

In 3-day bidding from 8 December to 10 December 2021, Shriram Properties IPO was subscribed 4.60 times whereas its retail portion was subscribed 12.72 times.

The public issue was subscribed 1.85 times in the QIB category while it was subscribed 4.82 times in the NII category.

It raised Rs 6 bn via the initial stake sale, that included a fresh issue of Rs 2.5 bn and an offer for sale (OFS) worth Rs 3.5 bn. The company had trimmed the OFS size from Rs 5.5 bn, reducing the issue size.

Shriram Properties is a part of the Shriram Group and is one of the leading residential real estate development companies in South India. The company primarily focuses on the mid-market and affordable housing segments.

Travel Firm Ixigo gets Approval for Rs 16 Bn IPO

Le Travenues Technology, which operates travel platform Ixigo, on Monday has received capital markets regulator's approval to raise Rs 16 bn through an initial share-sale.

The IPO comprises fresh issuance of shares worth Rs 7.5 bn and an OFS of equity shares to the tune of Rs 8.5 bn by existing shareholders.

As a part of the OFS, Saif Partners India IV will offload shares worth Rs 5.5 bn, Micromax Informatics will sell shares for Rs 2 bn, and Aloke Bajpai and Rajnish Kumar will divest stakes worth Rs 500 m each.

Proceeds of the fresh issue will be used to fund the company's organic and inorganic growth initiatives and for general corporate purposes. Bajpai currently holds a 9.18% stake in Ixigo, Kumar 8.79%, SAIF Partners 23.97% and Micromax 7.61%.

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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