After opening the day on a positive note, stock markets in India have continued their momentum. Sectoral indices are trading on a positive note with stocks in the energy sector and realty sector witnessing maximum buying interest.
The BSE Sensex is trading up 278 points (up 0.8%) and the NSE Nifty is trading up 95 points (up 0.9%). The BSE Mid Cap index is trading up by 1.3%, while the BSE Small Cap index is trading up by 1.4%.
The rupee is trading at 68.55 to the US$.
In news from the macroeconomic space, the International Monetary Fund (IMF) said today that to sustain the high growth rate India has achieved, the country should carry out banking sector reforms; continue with fiscal consolidation; simplify and streamline GST, and renew impetus on reforms.
IMF Communications Director, Gerry Rice, also said that the IMF expects the recovery to continue in FY19 and growth is projected at 7.4% in FY19 and 7.8% in FY20.
In the news from the banking sector, IDBI Bank share price is witnessing buying interest today on reports that the insurance regulator may clear the bank's deal with LIC today.
As per a leading financial daily, the board members of Insurance Regulatory and Development Authority of India (IRDAI) are likely to meet today, wherein they may clear the deal between IDBI Bank and Life Insurance Corporation of India (LIC). The development comes as the approval from IRDA is mandatory for insurers to invest over 15% in listed companies. As of March 2018, LIC held 10.8% in IDBI Bank.
The board is likely to grant an exemption to LIC for taking over 15% stake in the bank and then LIC may be allowed to buy additional 30% stake, taking its shareholding in the bank to over 40%.
At the time of writing, IDBI Bank share price was trading up by 8.5% on the BSE.
In news from the IPO space, the initial public offering (IPO) of auto component maker Varroc Engineering was subscribed around 3.6 times on the final day of the issue on Thursday.
The oversubscription was driven by strong interest from institutional investors.
The portion set aside for qualified institutional buyers was subscribed around 9.2 times, while non-institutional investors witnessed a subscription of 2.5 times and retail investors around 88%.
Speaking of IPOs, the stock market is gearing up for a burst of IPO activity, with at least 12 companies planning to raise more than Rs 170 bn over the next two months, after a quiet start to the June quarter.
Also, according to EY India IPO Readiness Survey Report, globally, Indian exchanges recorded the highest IPO activity as the country saw 90 IPO launches that raised US$ 3.9 billion in the first half of this year.
Meanwhile, the amount raised by SME IPOs in 2017 stood at Rs 17.9 bn. This is more than three times the amount raised in 2016. The number of SME IPOs launched also doubled from 66 to 132. This is evident from the chart below:
SME IPO Boom in 2017
We believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.
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