Home Manufacturer fund Sensex jumps 500 points, astute above 17,100; Metal and auto stocks rally

Sensex jumps 500 points, astute above 17,100; Metal and auto stocks rally

0

The Hang Seng jumped 1.3% while the Shanghai Composite gained 0.1%. The Nikkei advanced 0.8%.

In U.S. equity markets, Wall Street indices closed lower on Tuesday after Federal Reserve Chairman Jerome Powell signaled that the U.S. central bank would consider accelerating the withdrawal of its bond purchases as inflation risks are increasing.

The Dow Jones Industrial Average plunged 1.9% while the Nasdaq fell 1.6%.

Back home, Indian stock markets opened on a good note. Based on positive Asian indices and GDP data, benchmarks rose more than 1% at the start of trade.

The markets opened a gap against a backdrop of strong GDP growth of over 8% in the second quarter. With this, India continues to remain the world’s fastest growing major economies.

The ESB Sensex trades 554 points. Meanwhile, the NSE Nifty is trading up 151 points.

IndusInd Bank and HDFC are among the top winners today.

Dr Reddy’s lab, on the other hand, is among the big losers today.

The BSE Mid Cap Index and the BSE Small Cap Index are trading up 0.3% and 0.1% respectively.

Sector indices trade in a blended fashion, with metals and automotive stocks witnessing most of the buying.

Energy and health stocks, on the other hand, are trading in the red.

Shares of Rajesh Exports and KPIT Technologies hit their 52 week highs today.

The rupee is trading at 74.96 against the US dollar.

The price of gold is trading 0.1% at ??47,606 per 10 grams.

Meanwhile, silver prices are trading at ??61,646 per kg.

Crude oil prices recovered some losses today after steep drops in the previous session as major producers prepared to discuss how to respond to the threat of a blow to fuel demand for the Omicron variant.

In the news of the IPO space, the initial public offering (IPO) of Tega Industries, a manufacturer of consumables for the mining industry, was open for subscription today and will close on December 3.

The company seeks to increase ??6 billion by the IPO of shares, which is entirely an offer to sell (OFS) of 13 million shares by the promoters and existing shareholders.

The company’s shares trade at a premium of ??310 per share on the gray market.

Tega Industries provides custom solutions to the mining, bulk material handling and transportation industry, such as manufacturing wear resistant coating components required for grinding, sizing and more.

It has a product portfolio of over 55 mineral processing and material handling products. The company has six manufacturing sites, three of which are in India and three sites in major mining centers in Chile, South Africa and Australia.

In other news, a majority of domestic mutual funds ignored the sale of shares of Star Health & Insurance prior to the IPO due to valuation differences.

The insurer supported by Rakesh Jhunjhunwala ??$ 72.5 billion IPO, third-largest in 2021, raised ??$ 32.2 billion from 62 funds as part of the anchor award Monday, but only one mutual fund participated in the process. Edelweiss Mutual Fund which invests in put IPOs ??148.8 m in the Anchor subdivision.

Apparently, mutual funds had raised concerns about rich valuations in the company’s IPO roadshows.

The Star Health show was 12% underwritten on the first day of auction Tuesday. While the retail portion saw offerings for 64%, qualified institutional investors and individual high net worth categories had yet to be subscribed.

Star is the largest retail health insurer with 31% market share. The company recorded a loss of ??8.3 billion for the fiscal year ended in March 2021, against a profit of ??2.7 billion in fiscal year 2021.

It remains to be seen how these IPOs play out.

Let’s move on to the stock specific news …

NMDC is one of the hottest stocks today.

State mining company NMDC on Tuesday cut prices for lump ore by ??750 per ton and fines ??200 per ton, with immediate effect.

In a regulatory filing, the company said it revised the rates for lump ore or higher grade ore than ??5,200 per ton.

While the price of lump ore or low grade ore has been set at ??4,560 per tonne.

The prices exclude royalties, the district mining fund, royalties, logging license fees and other taxes, the NMDC said in a filing.

On November 5, the company set tariffs for lump ore at ??5,950 per tonne, and that of fines at ??4,760 per tonne, with effect from November 4, 2021.

Note that iron ore is the key raw material for making steel. A variation in its prices has a direct impact on steel prices. NMDC is the country’s largest iron ore producer.

The NMDC share price is currently trading at 1.4%.

Speaking of PSU, take a look at the chart below which shows how the BSE PSU Index has performed against BSE Sensex over the past few years.

View full picture

.

As the graph above shows, over the past decade, ??100 invested in the BSE PSU index would have eroded to ??80, against nearly 3 times the gains for the Sensex.

Here’s what Richa Agarwal, chief small-cap analyst at Equitymaster, wrote about PSU stocks in one of the editions of Profit Hunter …

However, it would be folly to paint all the PSUs with the same brush. There are a few exceptions in this space, which put their private peers to shame.

In a recent editorial, I shared an opportunity in a rising PSU stock that enables an irreversible megatrend – digitization.

This article is syndicated from Equitymaster.com

To subscribe to Mint newsletters

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now !!