After opening the day on a positive note, the Indian share markets registered further gains and have continued to trade in the green. Sectoral indices are trading on a positive note with stocks in the healthcare sector and reality sector witnessing maximum buying interest.The BSE Sensex is trading up 229 points (up 0.8%) and the NSE Nifty is trading up 83 points (up 1%). The BSE Mid Cap index is trading up by 1.5%, while the BSE Smal Cap index is trading up by 1.7%. The rupee is trading at 66.72 to the US$.
Takin6g a note of the latest initial public offer (IPO) in Indian markets, Punjab National Bank Housing Finance made a stellar debut on the Indian indices today. The scrip of the company got listed on the Bombay Stock Exchange (BSE) at Rs 863. This was a 11.4% premium over the issue price of Rs 775. On the National Stock Exchange (NSE), the scrip got listed at Rs 860, a premium of 10.9%.
The Rs 30 billion IPO was sold between 25-27 October 2016 and was oversubscribed nearly 30 times. The institutional quota was oversubscribed 86.2 times, the HNI quota was oversubscribed close to 68 times, while the retail quota was oversubscribed 1.2 times.The IPO was the second largest public issue of shares this year in the domestic market.As far as IPOs are concerned, listing gains and over subscription of the issues have caught the eye of market participants. With this euphoria, there are many more IPOs lined up in the coming days. This begs the question: What should one’s approach be towards IPOs?
We believe, one should not get swayed away by the buoyancy surrounding IPOs. Instead, what one should look for in IPOs is the fundamentals of the business and the attractiveness of valuations.Giving a doubtful IPO a miss can in no way reduce your chances to create long-term wealth. There are several big IPOs in the pipeline in the last few months of 2016.
In another news update, the Finance Ministry has asked financial institutions to keep a watch on developments in the Tata-Mistry tussle to safeguard the interest of investors in the Tata Group. Specifically, the government has asked institutions such as the Life Insurance Corporation (LIC) and banks to keep an eye on further developments in the Tata Group over the ouster of Cyrus Mistry.
As per the Finance Ministry, it is the duty of LIC and banks to see that public money is not put at risk since these institutions have invested depositors’ money in the Tata Group.
Last week, the Minister of State for Finance, Arjun Ram Meghwal, said that the government is keeping a close watch on the Tata-Mistry feud as developments at the US$ 100 billion conglomerate can have implications for the Indian economy.
In a recent pointed out a basic lesson in investing from the Tata-Mistry spat. I believe that the fall in market capitalisation of Tata group of companies is not as much as is being made out to be. A recent edition of The 5 Minute WrapUp too offers some lesson from the Tata Group explaining why every stock from even the best of the business groups may not be a good long-term bet.
On the news from global financial markets,the US presidential elections will be one of the key focuses this week. The outcome of elections results will surely have its impact on global financial markets.
The markets are expecting Mrs. Hillary Clinton to win the presidential elections. However, in case of a Trump win, Foreign Institutional Investors (FIIs) may flee from emerging markets to safe haven assets.
Donald Trump’s win would deal a big blow to US trade deals with Asia. His stance on trade, immigration and foreign policy is already making markets jittery. While economies like China may suffer the most, Indian exports will not remain untouched.
We believe, investors must be prepared for increased volatility in the stock markets in the short run. Apart from these developments, several global and domestic factors are likely to influence the course of stock markets in India.Our message to investors is to not fear volatility and uncertainty. Investors could instead, use volatility to their advantage as increased volatility could throw up bargain buying opportunities for value investors.