Sensex tops 61,000-mark, Nifty above 18,150; realty, energy, metal stocks lead

By Equitymaster
On Tuesday, Indian share markets opened on a strong note, following the trend on SGX Nifty. Benchmark indices derived support from robust global cues and edged higher today, extending gains to the fourth straight day.

Asian stock markets are higher today as technology shares were on a roll following the rise in US stocks on Tuesday as Powell's testimony eased worries.

The Nikkei advanced 1.9% while the Hang Seng zoomed 2%. The Shanghai Composite is up 0.4%.

In US stock markets, Wall street indices gained ground on Tuesday with Nasdaq leading the advance as investors were relieved that Federal Reserve Chair Jerome Powell's testimony to Congress did not include any major surprises.

The Dow Jones added 0.5% while the Nasdaq rallied 1.4%.

Back home, Indian share markets opened on a strong note, following the trend on SGX Nifty.

Benchmark indices derived support from robust global cues and edged higher today, extending gains to the fourth straight day.

Market participants are tracking big IT companies Tata Consultancy Services (TCS), Infosys, Wipro, which are scheduled to announce their December quarter results today.

Further, macroeconomic data on inflation, manufacturing and IIP numbers is being watched out to gauge possible policy action by the RBI.

The BSE Sensex is trading up by 351 points. Meanwhile, the NSE Nifty is trading higher by 110 points.

Reliance and SBI are among the top gainers today. Titan, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index are trading higher by 0.7% and 0.8%, respectively.

All sectoral indices are trading in green with stocks in the realty sector, energy sector and metal sector witnessing most of the buying.

Telecom stocks are in focus with the three leading telcos seeking 90-95% reduction in base price of 5G spectrum auction.

Shares of Adani Green and Swan Energy hit their 52-week highs today. Delta Corp gained 4% on the back of strong Q3 earnings.

The rupee is trading at 73.77 against the US$.

Gold prices are trading down by 0.1% at 47,675 per 10 grams.

Meanwhile, silver prices are trading down by 0.1% at 60,065 per kg.

Crude oil prices rose sharply yesterday supported by tight supply and easing fears of lesser economic impact due to Omicron.

In news from the telecom sector, Tata Teleservices is among the top buzzing stocks today.

The Indian government will pick up an unspecified equity stake in Tata Teleservices and a 9.5% stake in Tata Teleservices Maharashtra after the firms opted for the government’s relief measure of converting the interest on AGR (adjusted gross revenues) dues into equity.

Tata Sons, along with its affiliates, holds around 95.17% stake in Tata Teleservices, which in turn holds 75% stake in BSE-listed Tata Teleservices Maharashtra.

The dilution in Tata Sons’ stake in Tata Teleservices is still unknown.

In a statement to the stock exchanges, Tata Teleservices Maharashtra said the net present value (NPV) of the interest due to the government is expected to be 8.5 bn, subject to confirmation from the Department of Telecommunications (DoT).

The average price of the company’s shares at the relevant date of 14 August 2021, according to the calculation method provided by the DoT works out to 41.50 per share.

Here’s what the company said in an exchange filing:

In case of conversion, it will result in dilution of all the existing shareholders of the company, including the promoters. Following conversion, it is expected that the government will hold approx. 9.5% of the total outstanding shares of the company.

Yesterday, shares of Tata Teleservices Maharashtra closed at 291 apiece. The stock is on a spectacular run in the past year, gaining over 2,700%. The company’s market valuation has gone up to 570 bn even though its free float is very less.

The stock had risen higher on speculation that the company could turn out to be a winner replicating the success and business model of Tata Elxsi or Tata Communication.

Note that yesterday, Vodafone Idea also announced that it would opt for equity dilution. Following this, shares of Vodafone Idea tanked over 20%.

And a similar situation can be seen in Tata Teleservices Maharashtra. Shares of the company are locked in the 5% lower circuit band.

The above step may be in negative point from shareholder’s perspective but it’s good for both the companies. Tata Teleservices has AGR dues of 168 bn of which it has paid 42 bn and had opted for the 4-year AGR and spectrum payment moratorium.

We will keep you updated on the latest developments from the space. Stay tuned.

Speaking of the current stock market scenario, amid the ongoing volatility, have a look at the two charts below, in the order they have been placed:

Near Term Volatility in Sensex Compensated by Long Term Gains
View Full Image
Near Term Volatility in Sensex Compensated by Long Term Gains

The year-on-year change in the Sensex was hardly predictable but someone who stayed invested multiplied every lakh nearly 14 times.

Timing the markets could be suicidal as valuations and volatility put the markets in a see-saw mode.

As an individual investor, you need to sit tight over high conviction stocks and invest consistently to see the magic of compounding.

Because 2022 could be extremely profitable, over time, provided you reset your portfolio with the right kind of safe assets and safe stocks.

Moving on to news from the banking sector, Federal Bank in a regulatory filing said that its subsidiary Fedbank Financial Services (FedFina) has initiated the process for an initial public offer (IPO).

The board of directors of the bank in a meeting yesterday approved this.

Fedfina acquired its NBFC license in 2010 and has around 520 branches catering to products like gold loan, home loan, loan against property (LAP) and business loan.

Federal Bank holds 74% shares in the NBFC. Assets under management (AUM) of FedFina for 2020-21 stands at 46.3 bn, with a total revenue of 6.3 bn and a net profit of 0.6 bn.

Post the undertaking of the proposed IPO, FedFina would continue to be a subsidiary of Federal Bank.

Shares of Federal Bank are presently trading up by 2.1%.

(This article is syndicated from Equitymaster.com)


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