Stock markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the IT sector and telecom sector witnessing maximum buying interest. Metal stocks are trading in the red.
The BSE Sensex is trading up 40 points (up 0.1%) and the NSE Nifty is trading up 16 points (up 0.2%). The BSE Mid Cap index is trading down by 0.1%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 65.08 to the US dollar.
In the news from the IPO space, HG Infra Engineering Ltd made a tepid debut on bourses today. The scrip of the company, which recently concluded its IPO subscription offer, got listed at Rs 270, same as its issue price.
HG Infra Engineering Ltd is pre-dominantly engaged in the engineering, procurement and construction (EPC) services of road projects. Currently, more than 90% of the business comes from Maharashtra and Rajasthan.
The company's order book has grown at a phenomenal pace of 114% compounded annual growth rate (CAGR) from FY15 to FY17. With a track record of delivering projects on, the company has received bonuses for early execution of projects.
At the time of writing, HG Infra Engineering Ltd share price was trading at Rs 268.
Speaking of IPOs, the demand for IPO's has reached sky-high levels. This euphoria is something similar to what was seen in 2007-08.
At times like this, it pays to follow a merit-based selection - primarily including valuation, business, and management quality - 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 than not.
Also note that with big ticket IPOs in the limelight, SMEs have also joined in to get a share of the pie. The recent SME IPO data for 2017 certainly seems to suggest so.
The amount raised by SME IPOs in 2017 stood at 17.85 billion, 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
(Click on image to enlarge)
While it doesn't make sense to completely ignore this space, a certain sense of caution is definitely merited.
In the news from global financial markets, the Bank of Japan (BoJ) kept its monetary stimulus unchanged on Friday at Governor Haruhiko Kuroda's final policy meeting before his new term begins next month. The central bank also stuck to its upbeat view on the economy.
In its policy statement, the BOJ said inflation expectations have been more or less unchanged and also repeated its view that domestic demand is likely to follow an uptrend, with inflation rising toward 2%, mainly due to an improvement in the output gap and higher medium-to long-term inflation expectations.
Note that Kuroda has said to maintain the BOJ's ultra-easy policy.
The BoJ has pushed back the timing to reach its price target many times since it deployed its massive stimulus programme in 2013. It now hopes that consumer inflation will achieve its 2% target by March 2020, as signs of strength in the economy and a tight job market boost wages giving households higher purchasing power, allowing firms to hike prices.
What remains are many issues that can hamper Japan's economic growth going forward.
Also, the recent win of Japanese Prime Minister Shinzo Abe in elections also signals the continuation of Abenomics - the ultra-loose monetary and fiscal policies. These policies have influenced excessive money printing, too much debt, and too much government intervention in Japan.
As Ankit writes in one of the editions of Equitymaster Insider... "With Abenomics, Japan has gone overboard trying to revive its economy. The Bank of Japan is a Top 10 holder in over 90% of Japanese stocks. And it remains one of the biggest buyer of Japanese stocks."
It would be interesting to see the impact central bank's ultra-easy money policies will have on the economy going forward. Meanwhile, we'll keep you updated on all the recent developments in this space.
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