Daily Market Update FEB 15

unnamed Daily Market Update FEB 15

The government has committed to infuse Rs.3,000 crore as capital into the state owned general insurers so as to boost their capital buffers. These state owned insurers that will get funding support include National Insurance, Oriental Insurance and United India Assurance. It may be recollected that GIC Re and New India Assurance are already listed in the bourses. The idea, as stated in the Union Budget 2021, is to make these general insurers ready for a public issue and eventually hive off a majority stake in these general insurers so that they can be privatized with private ownership and private management.

It is going to be a tale of 2 IPOs on the bourses on Monday. Both the RailTel IPO and the Nureca public issue will open for subscription on Monday 15 February. RailTel IPO is entirely an offer for sale wherein the government will sell a total of 8.71 crore shares to the public in a price band of Rs.93-94 raising a sum of Rs.820 crore in the process. Investors can bid for minimum bid lots of 155 shares and retail investors can bid up to 13 lots. It will not impact the outstanding shares as the OFS funds will go to the government. The other IPO, Nureca, will look to raise Rs.100 crore at an issue price band of Rs.396-400. Nureca already has anchor investor commitments of Rs.44.55 crore ahead of the IPO. Investors can bid in minimum lot of 35 shares and retail investors can bid up to 14 lots maximum. QIB reservation is 75%.

SREI Finance, which has been at the centre of problems for some time now, has ended up posting a net loss of Rs.3800 crore in the Dec-20 quarter. These were largely on account of higher and accelerated provisions for loan losses. Operating revenues for the quarter fell to almost one-third on a yoy basis from Rs.1450 crore to Rs.490 crore in the current quarter. Its net worth stood at just about Rs.296 crore as of Dec-20. According to SREI, the company had accumulated losses on account of huge asset liability mismatches in the midst of the COVID pandemic. The NBFC credit squeeze only worsened matters.

ONGC followed the example of Reliance and has set up a subsidiary to buy its own gas produced in the KG-D5 basin of Krishna Godavari. This was disclosed by ONGC while announcing Dec-20 quarter results on Friday. The said company will source, market and trade in natural gas, LNG, HCNG, Bio fuels etc. In October 2020, the government had permitted associate companies of the gas producer to buy the fuel in open auctions. This will ensure better price discovery for gas and help ONGC to earn better margins on gas produced. The current gas price fixed by the government at $1.79 is half the cost of production.

Foreign portfolio investors have infused a total of Rs.22,038 crore into Indian markets in the month of February with half the month still left for trading. Out of this infusion, Rs.20,593 crore came into equity stocks and the balance Rs.1,445 crore came into debt instruments. This is a considerable improvement over the Rs.14,649 crore infused into equities in the month of January. Clearly, the Union Budget and its reformist undertone have made a big difference. FPIs have been also impressed by the way India has controlled the COVID pandemic and has made rapid strides in mass inoculation with the vaccine.

The market capitalization of the top 10 most valuable companies in the NSE index saw total value accretion of Rs.140,430 crore during the week ended 12 February. This is consistent with the 812 points rally in the Sensex during the week. Among the gainers, Reliance Industries saw market cap growing by Rs.74,330 crore during the week while ICICI Bank added Rs.22,944 crore in market cap during the week. Infosys was also not too far behind with market cap accretion of Rs.15,888 crore during the week. The two other major gainers in the week included HDFC adding Rs.12,439 crore and TCS adding Rs.12,420 crore. There were three major losers in the week. While HDFC Bank saw value decline of Rs.8,016 crore and HUL saw value loss of Rs.6,685 crore; Kotak Bank also saw depletion of Rs.6,161 crore in the week.

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