Share markets in India are presently trading on a strong note
The BSE Sensex is trading up by 299 points, up 0.6% at 50,693 levels.
Meanwhile, the NSE Nifty is trading up by 68 points.
Asian Paints and HCL Technologies are among the top gainers today. JSW Steel and Tata Steel are among the top losers today.
The BSE Mid Cap index is trading up by 0.3%.
The BSE Small Cap index is trading up by 0.4%.
On the sectoral front, stocks from the software sector, are witnessing most of the buying interest
On the other hand, stocks from the metal sector, are witnessing most of the selling pressure.
US stock futures are trading mixed today.
Nasdaq Futures are trading up by 50 points (up 0.4%) while Dow Futures are trading down by 41 points (down 0.1%)
The rupee is trading at 72.47 against the US$.
Gold prices are trading up by 0.2% at Rs 44,980 per 10 grams.
In global markets, gold prices were flat today ahead of the outcome of a U.S. Federal Reserve policy meeting. A rally in riskier assets like equities took some sheen off the precious metal.
Amid weak global cues, gold prices struggled in Indian markets. On MCX, gold futures were flat at Rs 44,930 per 10 grams. In the previous session, gold had edged 0.4% higher.
Moving on to stock-specific news...
Among the buzzing stocks, today is Aarti Drugs.
Indian pharmaceutical company, Aarti Drugs said that its board will consider a share buyback plan in its meeting on Friday, March 19, 2021.
"A meeting of the board of directors of the company is scheduled to be held on Friday, March 19, 2021, to consider inter alia, the proposal of buyback of the fully paid-up equity shares of the company including matters related/incidental thereto," Aarti Drug said in an exchange filing.
Note that a buyback is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than the market price. When it buys back, the number of shares outstanding in the market reduces and the proportion of shares a company owns increases.
Buybacks can be carried out by a tender offer or from the open market over an extended period of time.
Earlier this month, the company announced that Aarti Speciality Chemicals, a wholly-owned subsidiary of Aarti Drugs, stands to be one of the beneficiaries of the government's recently approved Production Linked Incentive (PLI) for the pharmaceutical sector.
Aarti Drugs is engaged in the manufacturing of active pharmaceutical ingredients (APIs), pharma intermediates, specialty chemicals and produces formulations with its wholly-owned subsidiary- Pinnacle Life Science Private Limited.
We will keep you posted on more updates from this space. Stay tuned.
At the time of writing, shares of Aarti Drugs were trading up by 3.7% on the BSE.
Moving on to news from the energy sector...
Adani Green Energy on March 15, 2021, placed the lowest bid of Rs 2.7 per unit at an auction conducted by state-run Solar Energy Corporation of India (SECI) for setting up and supplying 1.2-gigawatt (GW) wind power capacity.
The second-lowest bid of Rs 2.78 per unit was placed by CDC Group Plc-backed Ayana Renewable Power, Evergreen Power, and JSW Future Energy. While Adani Renewable and Ayana will get the contract to develop and supply 300 megawatts (MW) each, Evergreen and JSW Future will be awarded the contract for 150 MW and 450 MW capacity, respectively.
The other bidders included European alternative asset manager EQT and Temasek-promoted O2 Power, Shirdi Sai Electricals, Amp Energy, and ReNew Power.
With businesses spanning across energy, ports, airports, logistics, mining, resources, gas, defense, and aerospace, the Adani Group has been ramping up its green energy portfolio. Adani Green Energy (AGEL) has also formed an equal joint venture (JV) with French energy giant Total and plans to commission 25 GW by 2025.
India has set a target of achieving a 450GW renewable energy capacity by 2030. It currently has an installed renewable energy capacity of 89.6 GW, with 49.6 GW capacity under execution.
How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.
Speaking of small caps, note that since the lows in March 2020, the smallcap index has gained more than 100%.
While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.
Despite rallying more than 100% since the March 2020 lows, Richa believes small-cap stocks are set for a massive up move in 2021 and beyond. Here's what she wrote in a recent edition of Profit Hunter...
- The P/E for smallcap index doesn't make sense. There are thousands of listed small companies. Some have negative earnings. The base is not valid data to work with.
That said, the closest proxy to relative valuations is the Smallcap to Sensex ratio,
Historically, this ratio has averaged 0.43x. In the previous mega runs of the smallcap index, this ratio has gone as high as 0.75x.
In January 2018, when small caps peaked, the ratio was at 0.58x.
Guess where this ratio is now after a 100% run-up in the smallcap index?
0.38.
It's lower than the median over 2 decades.
Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.
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