▼ Nifty: 11,519 (-0.74%) ▼ Sensex: 38,979 (-0.82%)
The Nifty50 index had a gap-down opening and stayed negative for the rest of the day. Major sectoral indices such as the Nifty Bank (-1%) and Nifty Metal (-1.3%) were in the red. The Nifty Pharma index was up 0.4%, mainly supported by Dr. Reddy’s Labs (up 4.2%). The stock has seen strong buying interest after the announcement of its tie-up with the Russian Direct Investment Fund for a Covid-19 vaccine.
Here are the top stories of the day.
Happiest Minds’ stellar listing bodes well for upcoming IPOs
Today, IT service provider Happiest Minds' shares listed on the stock markets at more than double the issue price. On the stock’s debut day, its returns were as high as 138%. However, not everyone would be 'happiest' since the issue was subscribed over 150 times, and most investors did not receive an allotment. The situation could be similar for the Route Mobile IPO, which was oversubscribed 73 times. The disappointment due to non-allotment, the stellar listing of Happiest Minds, and the fear of missing out could result in investors queuing up for the CAMS and Chemcon Speciality IPOs, which open for subscription next week.
Dhanuka Agri and HSIL surge on buyback announcements
Agro chemical manufacturer Dhanuka Agritech has announced a ₹100 crore share buyback at the price of ₹1,000 per share (versus the current market price of ₹822). The stock closed 6.8% higher today. Similarly, building products maker HSIL Limited announced that its board would consider a buyback of shares in its meeting on 21 September. The stock was up 10% intraday, before closing 7.6% higher. Generally, buybacks indicate that the stock is undervalued at prevailing prices. While the news of a buyback often boosts the price of a stock, not all buyback plans are going through since the stock prices have already risen above the buyback prices.
Ircon stock rises after ₹1,900 crore railway order
Ircon International, the state-run transport infrastructure company, has bagged a railway electrification works order worth ₹1,900 crore from the Ministry of Railways. The tenure for execution is 15–20 months from the date of signing the agreement. The stock jumped 4.2% after the news. Meanwhile, the move towards railway privatisation is likely to pick up pace despite challenges, given the 42% drop in tariff revenues due to Covid-19.
Closing bell
The U.S. Federal Reserve has indicated that it may keep interest rates near zero at least through 2023 to support the economic recovery. Despite this, the Dow Jones Industrial Average closed flat yesterday and its futures are trading in the negative today. Back home, the benchmark Nifty50 index closed in the red despite hopes that India could get a vaccine by early next year. Probably, the market is more concerned about the 22.5% decline in tax collections, which reflects a weak economic scenario.
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