Sensex Opens At Record High; Energy & PSU Stocks Top Gainers

Asian share markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 1.1% while the Hang Seng is up 0.7%. The Shanghai Composite is trading up by 1.7%. US stocks fell on Wednesday, breaking a four-session streak of gains after Washington's threat to impose tariffs on an additional US$ 200 billion worth of Chinese goods fanned trade war fears, while a sharp drop in oil prices hit energy shares.

Back home, India share markets opened the day on a strong note. The BSE Sensex is trading up by 203 points while the NSE Nifty is trading up by 67 points. The BSE Mid Cap index and BSE Small Cap index both opened up by 0.7%.

The rupee is currently trading at 68.83 to the US$.

Barring IT stocks, all sectoral indices opened the day in green with energy stocks and PSU stocks witnessing maximum buying interest.

In the news from the IT sector. In the latest development, HCL Technologies is planning to buyback shares for about Rs 50 billion, offering Rs 1,100-1,150 per share.

The promoters-Shiv Nadar and his family - are expected to participate in the buyback.

Reportedly, the Rs 50-billion buyback will be at a premium of 17-20% to the closing price last Monday, when it had announced the intent of buyback.

Last year, HCL Tech bought back shares for Rs 35 billion at Rs 1,000 apiece, a 17% premium over the prevailing trading price at that time.

The company, with a market capitalization of Rs 1385.5 billion, aims to maximize the return of cash to shareholders. Rewarding shareholders with special dividend would have attracted dividend distribution tax.

In a buyback, the shares are tendered through the stock exchange and attract securities transaction tax, which is negligible compared to dividend distribution tax.

Note that, Tata Consultancy Services declared a Rs 160 billion share buyback programme last month, offering to buy back shares at a premium of over 15% at Rs 2,100 per share.

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Disclosure: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. ...

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