Sensex Ends Marginally Higher; Telecom And Oil & Gas Stocks Witness Buying

Indian share markets continued to trade near the dotted line during closing hours and ended the day marginally higher. Gains were largely seen in the telecom sector and oil & gas sector, while healthcare stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 33 points (up 0.1%) and the NSE Nifty closed higher by 14 points (up 0.1%). The BSE Mid Cap index ended the day up by 0.1%, while the BSE Small Cap index ended the day flat.

Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng stood down by 1.6% and the Nikkei was trading down by 2%. The Shanghai Composite stood lower by 1.5%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.9%. The DAX was down by 1.1% while the CAC 40 was down by 1%.

The rupee was trading at 71.81 to the US$ at the time of writing.

From the energy spaceIndian Oil Corporation share price was in focus today. Shares of the company witnessed buying interest after the company announced a buyback of 3.06% equity share at a price of Rs 149 per stock for a consideration not exceeding Rs 44 billion.

The buyback decision was taken by the company's board in its meeting held yesterday.

The company's board also recommended an interim dividend of 67.5% (i.e. Rs 6.75 per share) for FY19.

Speaking of buybacks, the number of buyback offers in 2017-18 were at an all-time high. Never, in the last two decades, had Indian markets seen fifty-nine companies announcing buyback plans.

But what is truly surprising is that unlike in the past, the buybacks this time seem skewed in favor of short-term investors rather than long-term ones.

Who Benefits from Such Buybacks?

Here's what Tanushree Banerjee, co-head of Research, wrote about it in one of the editions of The 5 Minute WrapUp...

  • Look at the history of buybacks since 2002. Logically promoters should offer to buyback shares at a premium when the stock is undervalued. And this logic held true until recently. The number of buybacks peaked when market valuations were low. And in times of peak valuations (like 2007 and 2011), promoters refrained from doing so.

    But not this time. The trend of rising buybacks in the last two years resembles the sentiment of a momentum investor. The appetite to buy shares kept rising with the rising markets. And the latest buybacks of stocks like TCS and MOIL, came at a time, when neither the broader index (Sensex) nor the stocks themselves, are undervalued.
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