markets today – Z+ Insurance

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Stocks to watch: The benchmark equity indices on the BSE and National Stock Exchange (NSE) had ended lower for the third successive day on Wednesday. The S&P Bse Sensex fell 237.44 points (0.41 per cent) to end at 58,338.93 while the Nifty 50 slipped 54.65 points (0.31 per cent) to settle at 17,475.65.

Markets were shut on Thursday and Friday on account of Mahavir Jayanti/Dr. Baba Saheb Ambedkar Jayanti and Good Friday respectively.

Here are the key stocks to watch on Monday, April 18, 2022:

HDFC Bank

The country’s largest private sector lender HDFC Bank on Saturday reported a 23 per cent jump in standalone net profit to Rs 10,055.20 crore for the March quarter, led by growth in loan demand across categories and lower provisioning as bad loans were trimmed. The bank’s net profit during the corresponding period of the previous fiscal stood at Rs 8,186.51 crore.

ICICI Prudential Life Insurance

ICICI Prudential Life Insurance on Saturday posted over two-fold jump in its net profit to Rs 185 crore for the January-March quarter on account of robust growth in new business.

The company had posted a profit after tax of Rs 64 crore for January-March FY2021, ICICI Prudential Life Insurance said in a regulatory filing.

For the full year 2021-22, the company’s net profit declined to Rs 754 crore from Rs 960 crore for the year ended in March 2021, it said.

Mahindra & Mahindra

Mahindra & Mahindra (M&M) on Saturday said it has agreed to sell over 34.75 lakh shares, constituting 22.81 per cent of the paid-up capital, in Mahindra Sanyo Special Steel Pvt Ltd (MSSSPL), to Japan-based Sanyo Special Steel Co Ltd in a Rs 212 crore deal.

Following the sale, the company’s holding in MSSSPL would become nil, M&M said in a regulatory filing. The Mumbai-based automaker will receive Rs 211.99 crore from the stake sale, it added.

InterGlobe Aviation (IndiGo)

IndiGo on Friday appointed former Shell India chairman Vikram Singh Mehta and former Indian Air Force (IAF) chief B S Dhanoa as independent non-executive directors.

Their appointment is “subject to receipt of security clearance from the Ministry of Civil Aviation (MoCA) and approval of the members of the company,” IndiGo said in a statement.

Mehta will replace Anupam Khanna, whose second term came to an end on March 26, and Dhanoa will replace former SEBI chief M Damodaran, who is stepping down on May 3, it said.

Dhanoa was IAF chief between January 1, 2017, and September 30, 2019, and Mehta was chairman of Shell Group of companies in India between 1994-and 2012.

Infosys

Infosys on Wednesday missed estimates for headline numbers for the March quarter. However, the company offered an encouraging revenue growth guidance for FY23 of 13-15 per cent in constant currency terms.

The software giant posted net profits for Q4FY22 of Rs 5,686 crore. Revenues for the quarter rose to Rs 32,276 crore.

-with PTI input

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Stock markets have taken a beating over the last 10 days following the Russian invasion of Ukraine. As oil prices continue to rise, the Sensex has lost 3.7% in the five trading sessions since February 24. This has raised concerns about the initial public offering (IPO) market, particularly upcoming IPOs, with 51 companies having received market regulator SEBI’s approval for their IPOs. While the IPO market witnessed a boom in 2021, investors need to be wary about upcoming issues, and should instead look at already listed companies that have good fundamentals.

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Will companies defer plans for IPOs?

If the Ukraine conflict drags on and crude prices remain elevated, there’s a possibility that the stock markets will remain subdued. As the IPO market is linked to the performance of the stock market, issuers are likely to wait for a better time — until the Ukraine conflict ends and stock markets stabilise, investment bankers said. The LIC public issue, through which the government planned to raise around Rs 60,000 crore, is expected to get deferred now. Experts say that even if a company comes out with a public issue, it may not see the enthusiasm seen over the last one year, and the returns too may be limited.

How have recent issues performed?

Over the last 11months, 50 companies managed to raise over Rs 1.1 lakh crore from the equity markets — the highest mobilisation in a year. Retail investors queued up in large numbers and many returned empty-handed as the issues got mobbed; some of them even got subscription of over 100 times.

The performance of the issues shows why the investor needs to be careful. While 22 of the 50 issues launched this financial year are trading below their issue price, nine generated returns of less than 11% – the Sensex gain since April 1, 2021. Some new-age companies have fallen in the market volatility recently.

Should you invest in new companies?

Market experts say investors need to be very careful about these. Currently, One 97 Communications (PayTM) is trading at a discount of 63% to its issue price, and Car Trade Tech at a discount of 65.8%. FSN E-Commerce Ventures (Nykaa), which hit a high of Rs 2,574 over its issue price of Rs 1,125, closed at Rs 1,502 on Thursday — a premium of 33.6% over the issue price. Zomato, which saw its share price more than double after listing, is trading at a premium of 8.1% over its issue price.

Experts feel that while these new-age technology companies demanded high premium and benefited from market liquidity and investor enthusiasm, sentiments are tapering. “Globally, there is lot of irrationality around start-ups. It is important to understand that when the market corrects, the investor confidence gets shaken even if a company declares a decline in profits in one quarter. So, in most of these companies where profitability is not visible for the next five years, it is very tough for an investor to stay invested, and that is what has been happening over the last couple of months,” said the head of research with a leading financial services firm.

Should you go for current IPOs?

After the buoyancy over the last 11 months, equity markets are expected to remain volatile in the near future on various accounts: global inflation concerns, withdrawal of global liquidity, rise in bond yields and interest rates — and now geopolitical tensions and rising crude oil prices. Upcoming issues may not be able to match the interest received by those launched over the last 11 months.

While that may limit listing gains, investors can go for companies that have a sound business model and growth potential. Relatively weak equity markets would also mean that the issues may be more reasonably priced, which is good for investors.

Is high subscription a good indicator?

In many cases, it holds true. If the qualified institutional segment gets strong subscription, it indicates institutional investors, who have the resources to do due diligence, are comfortable with the company’s prospects.

However, in several issues in the last 11 months, this has not been the case. Krsnaa Diagnostics Limited, whose issue had an oversubscription of more than 64 times, is currently trading at 41.5% below its issue price. Windlas Biotech, oversubscribed over 22 times, is trading 47% below its issue price.

What should investors look at?

An IPO is a derivative of the secondary market. If the secondary markets are strong, investor sentiments are high, and IPOs tend to fare well. However, that is not true for all cases. Investors need to thoroughly study the company — quality of promoters, business fundamentals, and financial and peer review analyses. Corporate governance practices should be given top priority. Investors must study other listed companies in the sector and compare their growth, and their PE ratio (market price to earnings per share). If the company coming with its IPO is demanding a higher valuation, they can choose to skip the issue.

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