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Adani Pays $3.50 Billion in SB Energy Holdings

Adani Pays $3.50 Billion for 100% Stake in SB Energy Holdings
by 5paisa Research Team 05/10/2021

In the biggest inorganic renewable energy deal in the Indian markets, Adani Green Energy bought SB Energy Holdings for a consideration of $3.50 billion or Rs.26,000 crore. It was an all-cash deal and marks the biggest inorganic investment of Adani Green in the renewable energy space. Adani Green is among the most valuable companies of the Adani Group.

SB Energy Holdings was formerly held jointly by Softbank of Japan and the Delhi based Bharti group in the ratio of 80:20. Post the acquisition, SB Energy Holdings becomes a 100% subsidiary of Adani Green Energy. This investment will be part of the massive $20 billion renewable energy investment committed by the Adani Group over the next 10 years.

The Modi government had made the shift to renewable energy and enhancement of the green energy mix a matter of policy commitment. This move by Adani will be one more step towards that larger commitment to renewable energy. Adani Energy is already among the largest companies in the world in terms of installed renewable energy capacity.

SB Energy today marks one of the few high quality renewable energy portfolios available in India. SB Energy has renewable assets with 5 GW of renewable capacity. This includes 1.70 GW of operational renewable assets, 2.56 GW of renewable capacity under construction and 700 MW of assets near construction. These capacities are spread across 15 projects.

Out of the total 5 GW renewable portfolio of SB Energy Holdings, nearly 4.18 GW or 84% of the total capacity is solar energy. Wind accounts for 7% of the total renewable capacity and the balance 9% is a hybrid of wind, solar and hydro power capacity. The average project size of each of the 15 projects is around 330 MW.

In terms of strategic fit, this acquisition will boost Adani Green Energy’s operational portfolio to 5.4 GW and its overall growth to 19.8 GW. Due to the acquisition, AGEL has already locked in an expansion of 4X operational capacity over the next few years. Nearly 88% of the proposed 19.8 GW capacity will have sovereign counterparties, which largely de-risks the business model.

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Gold Imports Cross $5 billion in September 2021

Gold Imports Cross $5 billion in September 2021
by 5paisa Research Team 05/10/2021

The month of Sep-21 saw a surge in gold imports which was one of the key factors triggering a spurt in merchandise trade deficit for Sep-21 to an all-time high of $23 billion. For September, the total gold imports stood at $5.1 billion; a growth of 750% from just $601 million in September 2020.

Even in volume terms, the total gold imports in Sep-21 stood at 91 tonnes compared to just 12 tonnes in Sep-20. Total gold imports for the quarter ended Sep-21 were 170% higher YoY at 288 tonnes. This surge in imports was an outcome of lower gold prices and higher stocking by jewellers ahead of the year-end festive demand for gold.

India has been the second largest consumer of gold after China for many years now. This year, the prices of gold have fallen 15% after scaling a high of $2,072 per troy ounce in the global market. Lower gold prices encouraged heavy stocking demand by jewellers in India. With the rupee relatively stable, the local gold prices also fell in tandem with global prices.

Local gold prices in the Mumbai market has been around Rs.45,500 per 10 grams compared to Rs.56,000 per 10 grams at the peak last year. That is because, gold has normally been a safe haven asset and tends to underperform when growth in the economy is reviving  and the equity markets are outperforming. Lower prices have driven gold demand.

Check - Gold Price Today

In the current festive season in India stretching from Navaratri in October, to Christmas in December, India is expected to report 35-40% of full year jewellery sales. That is why the festive months become important leading to aggressive stocking of gold by the jewellers. That has resulted in this surge in gold imports.

However, the RBI is not too comfortable with high gold imports as it means precious foreign exchanges gets used up for gold, which is considered an unproductive asset. In the past, the government had imposed quotas and duties to curtail the imports of gold. With its implications for the rupee and the trade deficit, it remains to be seen how the RBI and government react to this surge in gold demand.

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Sugar Stocks Shine on Record Sugar Exports

Sugar Stocks Shine on Record Sugar Exports
by 5paisa Research Team 05/10/2021

Sugar stocks may have been sharply up on 04-Oct, but if you look at sugar stocks from a slightly longer term perspective of 1 year, the outperformance is really visible.
 

Company

CMP (05-Oct)

52-week Low

Returns (%) from Low

EID Parry

Rs.440.80

Rs.260.05

69.51%

Balrampur Chini

Rs.386.60

Rs.147.50

162.10%

Dhampur Sugar

Rs.318.95

Rs.135.35

135.65%

Dalmia Bharat

Rs.469.00

Rs.122.55

282.70%

Triveni Engineering

Rs.200.90

Rs.62.35

222.21%

Shree Renuka Sugars

Rs.30.85

Rs.8.70

252.57%


Clearly, barring EID Parry, which has given a good performance, all the other major sugar stocks have given phenomenally strong returns. Sugar has been re-rated over the last 1 year for a number of reasons including export boost, better sugar prices and the big shift to ethanol. But the sugar spurt on 04-Oct was all about the export boost.

On 04-October, the ISMA (Indian Sugar Mills Association) announced the total sugar exports for the Sugar Cycle Year at 7.1 million tonnes, an all time record. In the sugar industry, the year coincides with the sugar crushing season and extends from October to September next year. That is also called the sugar year and that is period used for all sugar companies.

For the Sugar Year 2020-21, the exports at 7.1 million tonnes was 20% higher compared to 5.9 million tonnes in the sugar year 2019-20. There is an interesting shift that has happened in sugar in the last 10 years. Prior to 2010, sugar was always a cyclical sector but that has largely changed from 2011 onwards as sugar has stabilized due to huge buffer stocks.

For the sugar year 2020-21, the total sugar production is estimated at 31 million tonnes. If you add the 8.5 million tonnes of opening stock, that implies 39.5 million tonnes of sugar available. With domestic consumption at 26.5 million tonnes, the exports are expected to be at a record 7.1 million tonnes, after deducting the closing stock.

Sugar exports got a boost from higher sugar prices globally after the pandemic severely strained the supply of sugar from two of the world’s largest exporters viz. Brazil and Thailand. In addition, Indian government has given generous subsidies to ensure that Indian sugar producers get compensated for their higher cost of production. 

With ethanol blending picking up, the sugar situation is expected to stabilize further in the coming years.

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SEBI to Modify Norms for HNI Quota in IPOs

SEBI to Modify Norms for HNI Quota in IPOs
by 5paisa Research Team 05/10/2021

The Primary Markets Advisory Committee (PMAC) of SEBI has made some interesting recommendations for the HNI (non-institutional investors) segment. Currently, individual applications up to Rs.200,000 are classified as Retail Applications while individual applications above Rs.200,000 are classified as HNI/NII applications.

In addition, applications by corporates, small NBFCs etc are also classified under the NII/HNI category. This category has a standard allocation of 15% in all IPOs. Here are some key changes that the PMAC has proposed to ensure that the HNI segment is better represented and also ensures broader coverage of investors.

The HNI quota is proposed to be further dividend into 2 sub-segments. The category of applications in the range of Rs.2 lakhs to Rs.10 lakhs can be given 5% out of the 15% HNI quota while applications above Rs.10 lakhs can be given 10%. This will ensure better representation in the case of smaller HNIs applying in the Rs.2-10 lakhs range.

The PMAC has also suggested to move out of the proportionate allotment system that is applied to HNIs, as it is biased in favour of the large investors. Instead, PMAC wants the allotment to be based on “draw of lots” similar to the retail segment. The endeavour is to ensure that the ownership is as widespread as possible.

Underlining the importance of wider spread of ownership among HNIs, the PMAC pointed out that the oversubscription median had gone up substantially in the last 3 years. In 2018, the peak HNI oversubscription was 195X, while in 2021, Paras Defence IPO saw HNI oversubscription of 927X. The oversubscription was being driven by leveraged applications as investors just tried to put in larger applications to get higher proportionate allotment.

On a tangential note, the PMAC also noted that in a number of recent cases, the price band had been too narrow. Effectively, this becomes tantamount to a fixed-price issue defeating the very purpose of having a price band and enabling price discovery through book building. PMAC wants the price band to have a gap of at least 5%. So the price band for an IPO can be Rs.1,000-Rs.1,050 but not Rs.1,000-Rs.1,030.

Also Read:-

How to increase the chances of IPO allotment

How to apply for IPOs?

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How to Check the Allotment Status of Aditya Birla Sun Life AMC IPO

How to Check the Allotment Status of Aditya Birla Sun Life AMC IPO
by 5paisa Research Team 06/10/2021

The Rs.2,768.26 crore of Aditya Birla Sun Life AMC IPO, consisting entirely of an offer for sale (OFS), was subscribed 5.25X overall at the close of bidding on 01st October. The basis of allotment will be finalized on 06th October, demat credits will happen on 08th October and listing on 11th October. If you applied for the IPO, check your allotment status online now.

Check - Aditya Birla Sun Life AMC IPO Subscription Day 3

You can either check your allotment status on the BSE website or the IPO registrar, KFINTECH Private Limited (formerly Karvy Computershare). Here are the steps:


Checking the allotment status of Aditya Birla Sun Life AMC on BSE website


Visit the BSE link for the IPO allotment by clicking on the link below

https://www.bseindia.com/investors/appli_check.aspx 

Once you reach the page, here are the steps to follow:

i) Under Issue Type – Select Equity Option
ii) Under Issue Name – Select Aditya Birla Sun Life AMC from the drop down box
iii) Enter the Application Number exactly as in the acknowledge slip
iv) Enter the PAN (10-digit alphanumeric) number
v) Once this is done, you need to click on the Captcha to verity that you are not a robot
vi) After you answer a few pictorial questions and verify, click on the Search Button

The allotment status will be displayed on the screen in front of you informing about the number of shares of Aditya Birla Sun Life AMC IPO allotted to you.


Checking the allotment status of Aditya Birla Sun Life AMC on KFINTECH (Registrar to IPO)


Visit the KFINTECH registrar website for IPO status by clicking on the link below:

https://rti.kfintech.com/ipostatus/

Once you click on Recent IPOs, the dropdown will only show the active IPOs, so once the allotment status is finalized, you can select Aditya Birla Sun Life AMC from the drop down box.

I) There are 3 options:

i) You can either Query the allotment status based on PAN, Application Number or DPID-Client ID combination.

II) To Query by PAN, check the appropriate box and follow these steps:

i) Enter the 10-digit PAN number
ii) Enter the 6-digit Captcha Code
iii) Click on Submit button
iv) Allotment status gets displayed on screen

III) To Query by Application Number, check the appropriate box and follow these steps:

i) Select Application Type (ASBA or Non-ASBA)
ii) Enter the Application Number as it is
iii) Enter the 6-digit Captcha Code
iv) Click on Submit button
v) Allotment Status gets displayed on screen

IV) To Query by DP-ID, check the appropriate box and follow these steps:

i) Select the depository (NSDL / CDSL)
ii) Enter the DP-ID
iii) Enter the Client-ID
iv) Enter the 6-digit Captcha Code
v) Click on Submit button
vi) Allotment Status gets displayed on screen

Also Read:-

1) Aditya Birla Sun Life AMC IPO : 7 Things to Know About

2) Upcoming IPOs in 2021

3) List of Upcoming IPOs in October 2021

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Moody’s Upgrades India’s Rating Outlook to “Stable”

Moody’s Upgrades India’s Rating Outlook to “Stable”
by 5paisa Research Team 06/10/2021

On 05th October, Moody’s raised India’s sovereign rating outlook from “Negative” to “Stable”. However, the sovereign rating for India’s local and foreign currency debt was maintained at Baa3. It may be recollected that at the peak of the pandemic in May 2020, Moody’s had downgraded India’s sovereign rating from Baa2 to Baa3 with negative outlook.

Just to give a perspective, India’s ratings continue to be below the pre-2020 levels. The current rating of Baa3 is the lowest investment grade rating assigned by Moody’s and even one notch below this level would put India in speculative category. Among other major countries in the Baa3 category are Italy and Russia.

One of the big reasons for this outlook upgrade was that the vicious cycle created by the pandemic was abating in India. During the pandemic, the weak real economy was hitting the financial markets, which was in turn hitting the real economy. According to Moody’s India appears to have broken out of that vicious cycle for now.

Among the 3 major global rating agencies, now Moody’s and S&P have placed India in the low investment grade with stable outlook. However, Fitch continues to position India in the low investment grade category with negative outlook. By upgrading the outlook to stable, Moody’s gives additional buffer to India as protection against downgrade to speculative.

Moody’s has been Impressed specifically by the sharp bounce in GDP, despite the pandemic. Moody’s underlined that the aggressive vaccination program that had inoculated more than 90 crore Indians was largely instrumental in making India less vulnerable to any resurgence of delta variants. The current account moving from deficit to surplus was also positive.

Moody’s has raised some pertinent concerns too.

i) Per Capita income at under $2,000 in absolute terms and $6,400 in PPP terms is much lower than the peer group.

ii) Moody’s also pointed that the fiscal deficit levels at 9.5% and 6.8% were too high for comfort. The combined deficit at 13.5% was another dampener.

iii) One area of concern was the spike in debt levels with average debt levels surging in 2021 to well above the peer group median.

iv) Moody’s also appreciated the role of the government and the RBI in helping India spend its way out of trouble, but insisted on continued reforms.

As Moody’s summed it up, India has never defaulted on any debt in the last 38 years. That should put investors in comfort zone.

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