Bears dominate D-Street

Nifty50: 17,764 ▼-133.8 (-0.7%)
Sensex: 59,636 ▼-372.3 (-0.6%)

• The markets continued to witness selling pressure. 
• Of the Nifty50 pack, 43 stocks declined
• Among the Nifty sectoral indices, only PSU Bank (+0.07%) closed in the green. 
• Whereas, Auto (-2.6%) and Metal (-2.5%) were top losers.

For more updates on F&O, click here.

Here are the top stories of the day.

Escorts surges as Kubota hikes stake

Kubota Corp. (Japan), which currently holds about 9% stake in tractor maker Escorts, will invest ₹1,872 crore in the company and raise its stake to 14.9%. This preferential issue is priced at ₹2,000 per share, about 22% higher than yesterday’s closing price. 

Further, Kubota will make a mandatory open offer at ₹2,000 per share to acquire upto 26% shares of the company. These transactions are likely to be completed by March ‘22. The capital infusion is expected to pave the way for the next phase of growth and expansion. Meanwhile, the existing promoters continue to remain fully invested in the company. 

Auto retail sales see worst festive season

As per Federation of Automobile Dealers Associations (FADA), the recent festive season was the worst for auto dealers in the last decade. Meanwhile, the total retail sales during October ‘21 declined by 5% year on year. The weakness in sales was mainly due to a 21% fall in tractors which had a higher base and a 11% drop in passenger vehicle sales which reeled under chip shortage. 

On the other hand, commercial vehicles sales were upbeat with 26% growth. The association has highlighted that the two wheeler inventory levels have reached 40-45 days period, which is a cause of concern. Meanwhile, the Nifty Auto index fell 2.6% today.

Paytm makes tepid debut

The parent company of Paytm, One97 communications, listed 9.3% discount to its issue price of ₹2,150 per share. After the weak listing, the shares of the company continued their downward trajectory and ended 20% lower from its open price. However, shares of KFC franchise operator Sapphire Foods listed at a premium of 14.4% in comparison to its issue price.    

Meanwhile, investors continued to flock towards women’s bottom-wear brand Go Fashion. On day 2, the public issue was oversubscribed more than 5 times. You can apply for this IPO on Upstox.

Closing bell

The markets fell for a third day in a row on multiple sentiment spoilers viz. Paytm’s weak debut, rising concerns over inflation and weakness in international indices. Further, traders typically chose to lighten their commitments ahead of a long weekend. For next week, apart from Go Fashion which closes on Monday, no new IPOs have been announced yet. Sliding markets and Paytm’s tepid debut could make companies re-think on their IPO schedule. Meanwhile, market experts would keenly watch the performance of the US markets for the rest of this week and decide on their plan of action for next week. 

Good to know

What is an open offer?

When a company A acquires a majority stake in company B, it is required to provide an opportunity to the existing shareholders of company B to sell their shares. This is referred to as an open offer. In India, an open offer is triggered when a company buys a majority or up to 15% stake in a listed company. The acquirer has to make an open offer to buy up to additional 26% stake in the company. It is seen as an exit route for the minority shareholders in the event of a new management taking over.

Yay 👍 or Nay 👎?

We'd love your thoughts on this market recap.

Haven't tried out Upstox yet? Click here to open your account now!

To catch our latest educational videos, join our Telegram channel here.

Disclosures and Disclaimer

Investment in securities markets is subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by RKSV group. Investors should consult their investment advisor before making any investment decision.