Indian share markets witnessed volatile trading activity throughout the day today and ended higher.
Benchmark indices snapped their five-day losing run and ended on a positive note in a highly volatile session as global markets looked to stabilize post a manic Monday.
The Sensex had opened with a massive downside gap of over 300 points. It, then, extended its losses to hit a low of 46,410, sliding 1,082 points in early deals. However, bargain buying in banking and auto counters amid better-than-expected quarter three results by Axis Bank and Maruti Suzuki pushed the index higher.
Photo by Naveed Ahmed on Unsplash
The NSE Nifty followed suit with the index hitting a low of 16,837 in opening deals. It, too, staged a smart recovery of 441 points during the second half of the trading session.
At the closing bell, the BSE Sensex stood higher by 367 points (up 0.6%).
Meanwhile, the NSE Nifty closed higher by 129 points (up 0.8%).
Maruti Suzuki and Axis Bank were among the top gainers today.
Wipro and Bajaj Finserv, on the other hand, were among the top losers today.
The SGX Nifty was trading at 17,260, up by 203 points, at the time of writing.
The BSE MidCap index and the BSE SmallCap index ended up by 1% and 0.8%, respectively.
Sectoral indices ended on a positive note with stocks in the power sector, auto sector and telecom sector witnessing most of the buying interest.
IT and consumer durables stocks, on the other hand, witnessed selling pressure.
Shares of Bharat Dynamics and ABB India hit their respective 52-week highs today.
Asian stock markets ended on a negative note today.
Both, the Hang Seng and the Nikkei ended down by 1.7%, while the Shanghai Composite ended down by 2.6%.
US stock futures are trading on a negative note today with the Dow Futures trading down by 100 points.
The rupee is trading at 74.78 against the US$.
Gold prices for the latest contract on MCX are trading up by 0.1% at Rs 48,597 per 10 grams.
In news from the IT sector, IndiaMART InterMESH was among the top buzzing stocks today.
Shares of IndiaMART InterMESH hit a fresh 52-week low of Rs 4,970, down 15% on the BSE in today's intra-day trade after the company reported a disappointing set of numbers for the December quarter.
Consolidated net profit declined 12% year on year (YoY) at Rs 700 m from Rs 800 m in a year ago quarter.
The stock price of India's largest online business to business (B2B) marketplace for business products and services traded at its lowest level since December 2020.
It quoted lower for the seventh straight trading day, and has plunged 22% during the period. The stock has nearly halved from its 52-week high level Rs 9,952 hit on 5 February 2021.
In December quarter, the company's revenue from operations grew 8% YoY to Rs 1.9 bn from Rs 1.7 bn in the same period last year. Earnings before interest, tax, depreciation and amortisation (EBITDA) margin contracted 900 bps at 42% during the quarter.
Meanwhile, IndiaMART, announced its participation in the Series B investment round of Simply Vyapar Apps ('Vyapar'), of Rs 2.2 bn.
The round has been led by WestBridge Capital, along with the participation of existing investor India Quotient. Vyapar's valuation post this round shall stand at approximately Rs 8.8 bn, the company said.
As part of the transaction, IndiaMART acquired shares for an aggregate investment of Rs 615.5 m, via a mix of primary and secondary share purchases. Post this round, IndiaMART shall hold 27% in Vyapar on a fully diluted basis.
IndiaMART InterMESH share price ended the day down by 14.3% on the BSE.
Speaking of the current stock market scenario, note that the BSE smallcap index has surged more than 200% since the crash in March 2020.
Despite the index being up more than 2 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2022 and beyond.
Here's why...
The Smallcap to Sensex ratio, a metric referred to get a sense of relative valuations, currently stands at 0.48 times. To be sure, this is higher than a median of 0.43 times.
And yet, it's the lowest of all the peaks in the smallcaps so far. In the last cycle which peaked in January 2018, when the ratio touched 0.49, the peak was still 9 months away.
(Click on image to enlarge)
Here's what Richa wrote in one of the editions of Profit Hunter...
- When it comes to buying smallcap stocks, especially at this point in the rebound rally, you will need a bottom up approach, and a long term horizon.
In fact, if you don't have the stomach to withstand a 20%-30% kind of corrections and volatility, this space may not be for you at all. And you should stop reading right here.
As per Richa, smallcaps are a great opportunity to make some big returns. But you need to stay disciplined when it comes to allocating money. And you need to be sharp when picking the right stocks.
Moving on to news from the IPO space...
Manyavar-Owner Vedant Fashions IPO To Open Next Week
The initial public offering (IPO) of Vedant Fashions, which owns ethnic wear brand Manyavar, will open on 4 February 2022. The initial share sale will conclude on 8 February 2022, according to the red herring prospectus (RHP).
The public issue is purely an offer for sale (OFS) of 36.4 million equity shares by the promoter and existing shareholders.
The promoters of the company are Ravi Modi, Shilpi Modi and Ravi Modi Family Trust.
Since the IPO is entirely an offer for sale, the company will not receive any proceeds from the public issue.
As of September 2021, the company has an extensive retail network with 546 exclusive brand outlets (EBOs), including 58 shop-in-shops globally - 11 overseas EBOs across the US, Canada and the UAE, having a large Indian diaspora.
In India, the company's EBO network spans 212 cities and towns as of September 2021.
'We seek to grow our retail network and product reach by entering new geographies, including in Tier II and III towns and cities in India, as we believe that these markets offer significant growth opportunities for us,' the company said.
Axis Capital, Edelweiss Financial Services, ICICI Securities, IIFL Securities and Kotak Mahindra Capital are the book running lead managers to the issue.
How this IPO pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.
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