Share markets in India are presently trading marginally lower. Sectoral indices are trading on a negative note with stocks in the oil & gas sector and IT sector witnessing maximum selling pressure.
The BSE Sensex is trading flat, while the NSE Nifty is trading down by 16 points (down 0.2%). The BSE Mid Cap index is trading down by 0.3%, while the BSE Small Cap index is trading down by 0.4%. The rupee is trading at 64.90 to the US$.
Stock market participants are closing tracking concerns lingering over a possible trade war which led to a sharp sell-off in global equities at the end of the last week.
Last week, US President Donald Trump announced tariffs on Chinese goods and thereby stoking fears of a trade war.
Towards the above development, China said it doesn't fear a trade war with the US and announced plans for reciprocal tariffs on US$ 3 billion of imports from the US.
Reportedly, China plans tariffs on imports of US pork imports, recycled aluminum, steel pipes, fruit, and wine. China will also pursue legal action against the US at the World Trade Organization (WTO) in response to the US planned tariffs on steel and aluminum imports.
Policymakers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. Meanwhile, business groups representing companies ranging from Walmart Inc. to Amazon.com Inc. are warning US tariffs could raise prices for consumers and sideswipe stock prices.
How exactly this trade war will unfold is something to watch out for. We'll keep you updated on all the developments from this space.
In the news from the IPO space, the initial public offer of Lemon Tree Hotels Ltd has opened for subscription today.
The proceeds from this IPO of around Rs 10.9 billion will go to the selling shareholders. None of the promoters are selling their shares in this IPO and thus their holdings post the IPO will remain the same at 29.16%.
Lemon Tree Hotels Ltd. is India's largest hotel chain in the mid-priced hotel sector, and the third largest overall, on the basis of controlling interest in owned and leased rooms, as of June 30, 2017 (as per the Horwath Report). It is also the ninth largest hotel chain in India in terms of owned, leased and managed rooms, as of June 30, 2017. The company operates in the mid-priced hotel sector, consisting of the upper-midscale, midscale and economy hotel segments.
A significant part of the company's revenues (57% in FY17) comes from the corporate customers. The company opened its first hotel in 2004 and the count as of 31 July 2017 stood at 40.
To know our view on this IPO, you can read our IPO note on Lemon Tree Hotels Ltd (requires subscription).
Speaking of IPOs, the demand for IPO's has reached sky-high levels. Avenue Supermarts was seen as the first company last year to cross the 100-time subscription mark swiftly followed by CDSL and Dixon technologies, among others.
IPO Subscription Times (2017)
This euphoria is something similar to what was seen in 2007-08. When everyone around you is clamoring to get a piece of the IPO pie, it makes sitting tight difficult. And, why should you sit tight when stocks like Avenue Supermart lets you pocket a cool 100% gain from day 1 of the listing?
History suggests that these cases are few and far between. More than 70% of the IPOs listed in 2007 and 2008 are in the red, even today when the Sensex is at an all-time high.
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 than not.
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