Sensex Ends 297 Points Lower; Telecom and Energy Stocks Witness Huge Selling

Thu, 26 Dec Closing

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

At the closing bell, the BSE Sensex stood lower by 297 points (down 0.7%) and the NSE Nifty stood down by 88 points (down 0.7%).

The BSE Mid Cap index ended the day down 0.1%, while the BSE Small Cap index ended the day up by 0.4%.

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

The rupee was trading at 71.29 against the US$.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was down by 0.15% and the Shanghai Composite was up by 0.85%. The Nikkei 225 was up 0.60%.

European markets were also trading on a mixed note. The FTSE 100 was up by 0.11%. The DAX was trading down by 0.13%, while the CAC 40 stood flat.

In news from the macroeconomic space, as per a leading financial daily, the government may come up with the highest-ever divestment target of Rs 1.5 lakh crore in the Budget come February.

As per the news, the government may draw up a list of PSUs where stakes will be reduced below 51% next year.

DIPAM is pushing for corporatisation of Life Insurance Corporation of India (LIC) and The Airports Authority of India (AAI) to help list the companies. It is eyeing about Rs 900 billion from the completion of Bharat Petroleum Corporation (BPCL) and Container Corporation of India (CONCOR) stake sale in the first half of FY21.

So far, the government has raised just Rs 173.6 billion this year through disinvestment proceeds with no strategic sale against its disinvestment target of Rs 1.05 lakh crore.

There are concerns over the fiscal deficit as a few reports already suggested the privatisation of BPCL was unlikely this calendar year.

Note that severe shortfall in overall tax revenues is being compounded by a large shortfall in divestment proceeds.

As per the reports, the government could miss its FY20 divestment target by as much as Rs 500 billion since privatisation of Air India, BPCL and CONCOR is unlikely to be completed by March 2020.

The shortfall will affect the government's ability to meet its FY20 fiscal deficit target of 3.3% of gross domestic product (GDP).

How this pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Moving on to news from the IPO space, a study by PRIME Database suggested that fund raising through initial public offerings (IPO) hit its lowest level in 2019 since 2014. This was seen even as the benchmark equity indices hit their record highs

As per the report, prospective companies, including PE-backed firms, failed to hit the Indian stock market despite having regulatory nods from market regulator. Some 47 companies looking to raise over Rs 510 billion allowed their market regulator approvals to lapse due to weakness in the broader markets. These approvals were valid for one year.

For the SME segment, it was the first year of negative growth in fund mobilization since inception.

In all, mainboard and SME IPOs moblised Rs 129.8 billion in 2019. This was a 60.95% drop from the previous year, and the lowest since Rs 14.6 billion raised in 2014.

Out of the total raised amount, 16 mainboard IPOs raised Rs 123.6 billion, down 60.06% from the Rs 309.5 billion raised through 24 IPOs in 2018.

Also, note that despite the low fund raising, 2019 saw some of the most profitable IPOs.

In a recent edition of The 5 Minute WrapUp, Ankit Shah shared how IPOs offer insights into the mood of the stock markets.

He picked the six most successful IPOs of the year and checked the retail investor enthusiasm for them.

Obviously, all these IPOs were oversubscribed across investor categories. But the level of retail investor enthusiasm differed widely, depending on the overall market sentiments. This can be seen in the chart below:

Are Retail Investors Back in the IPO Game?

Here's what Ankit wrote about it...

• Clearly, IRCTC witnessed the highest number of bids for the retail category. Factoring in the discount of Rs 10 per share for the retail category, the total bids were worth a whopping Rs 3,242 crore. Over five times the entire IPO size!
  
  Polycab India and the recent IPO of CSB Bank also received a strong thumbs-up from retail investors.

Does this hint that retail investors are coming back to the markets? Could we witness of flurry of IPOs in the coming months?

It would be interesting to see how this trend pans out in 2020.

Ankit is keeping a close watch and going to pick all the profitable IPOs for his readers at Insider. Stay tuned.

And 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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