Sensex Trades Marginally Lower, The Dow Futures Trade Flat

Share markets in India are presently trading marginally lower.

The BSE Sensex is trading down by 32 points, down 0.1%, at 59,267 levels.

Meanwhile, the NSE Nifty is trading up by 3 points.

ONGC and IOC are among the top gainers today. Cipla and Shree Cement 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 0.6%.

On the sectoral front, stocks from the energy sector are witnessing most of the buying interest.

On the other hand, stocks from the real estate sector are witnessing most of the selling pressure.

US stock futures are trading mixed today.

Nasdaq Futures are trading up by 33 points (up 0.2%) while Dow Futures are trading flat.

The rupee is trading at 74.48 against the US$.

Gold prices are trading down by 0.5% at Rs 46,672 per 10 grams.

Gold prices dipped in Indian markets today, tracking softer global rates. On MCX, gold futures were down 0.2% to Rs 46,779 per 10 grams. In the previous session, gold had jumped 0.8%.

In global markets, gold prices were lower today amid a stronger US dollar but concerns over global economic growth supported the precious metal at lower levels. Spot gold fell 0.4% to US$ 1,761.7 per ounce, after hitting US$ 1,770.4 in the previous session.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best-performing commodities this year to combat the fallout from the coronavirus pandemic.

Moving on to stock-specific news...

Among the buzzing stocks, today is ONGC.

Share of Oil and Natural Gas Corporation (ONGC) rallied 8% in intraday trade today on the back of higher crude oil prices.

The stock of the state-owned oil exploration & production (E&P) company was trading at its highest level since November 2018.

The improvement in oil and gas realizations should drive the company's earnings growth and valuations.

Crude prices hit a three-year high after OPEC (Organization of the Petroleum Exporting Countries) and its allies decided to continue with their oil supply plan in their latest meeting.

The organization has faced calls from big consumers, such as the United States and India, for extra supplies after oil prices surged more than 50% this year.

Brent crude prices are currently at more than USD 75/bbl, up 47% in 2021, driven by a recovery in global demand with the opening up of economies.

With crude oil and product inventory in the lower half of the five-year range and as the global recovery continues to gather pace, there is likely to be an upside risk to crude oil prices.

We will keep you posted on more updates from this space. Stay tuned.

At the time of writing, ONGC shares were trading up by 8.4% on the BSE.

Moving on to news from the power sector...

Adani Green Energy Acquires SB Energy for US$ 3.5 bn

Adani Green Energy (AGEL) said that it has completed the acquisition of SB Energy India in an all-cash deal for which definitive agreements were signed on 18 May 2021.

With this deal, SB Energy India is now a 100% subsidiary of AGEL. Earlier, it was an 80:20 joint venture between Japan-based SoftBank Group and Bharti Group.

The acquired portfolio comprises 100% sovereign-rated counterparties. The average tariff for the portfolio is Rs 2.75 per unit.

It added that the transaction pegs SB Energy India at an enterprise valuation of about Rs 260 bn and marks the largest acquisition in the renewable energy sector in India.

Vneet S Jaain, managing director and chief executive officer, AGEL.

  • The addition of these high-quality large utility-scale assets from SB Energy India demonstrates AGEL's intent to accelerate India's efforts to transition towards a carbon-neutral future. Our renewable energy foundations will enable an entire ecosystem of new industries that can be expected to catalyze job creation in multiple sectors.

The company added that with this acquisition, its operational portfolio stands at 5.4 GW (gigawatts) and overall portfolio at 19.8 GW implying four-times growth.

AGEL's counter-party mix for its overall portfolio of 19.8 GW is further reinforced with 87% sovereign-rated counter-parties.

SB Energy India has 5 GW renewable assets across four states in India. The portfolio holds 1,700 MW of operational renewable assets, 2,554 MW of assets under construction and 700 MW of assets near construction.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

Disclosure: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research ...

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