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Vodafone Idea share price jumps over 4.5% on selling Indus stake for Rs 3,760 crore

Vodafone Idea share price jumped as much as 4.6 per cent to Rs 9.70 apiece on BSE, a day after the struggling telecom firm informed the exchanges that it has sold its 11.15 per cent stake in Indus for a cash consideration of Rs 3,760 crore in accordance with the terms of the agreement. The telecom company also said that out of the consideration received from Infratel, the Vodafone Idea has made a prepayment of Rs 2,400 crore which will be adjusted in line with terms of the agreement. Vodafone Idea share price has corrected nearly 28 per cent from its 52-week high of Rs 13.45 touched on September 4, this year.

Vishal Wagh, Head of Research, Bonanza Portfolio, told Financial Express Online, Vodafone Idea has major support around 8 and resistance at 10. Breakout on the higher side can move the stock towards 14. On the other hand if broken 8 it will move towards 6.

Besides, a consortium backed by Oaktree Capital has offered to provide at least $2 billion of funding to Vodafone Group Plc’s listed Indian arm, Bloomberg cited people with knowledge of the matter as saying. Oaktree teamed up with several other firms including Varde Partners for the potential deal with Vodafone Idea Ltd. According to the Telecom Regulatory Authority of India (TRAI) data, in August, Vodafone Idea continued to lose market share, with overall subscribers declining by 1.2 million to 300 million. Bharti Airtel maintained healthy 3.2 million additions, even as Reliance Jio’s additions slowed to 1.9 million, and VIL gained 4.6 million.

According to the research and brokerage firm Motilal Oswal Financial Services, the significant cash requirement to service debt leaves limited upside opportunity for Vodafone Idea’s equity holders. With finance cost of Rs 141 billion, servicing debt would prove challenging – unless there is debt restructuring with the lenders. “Assuming 7x EV/EBITDA and Rs 1,145 billion net debt (including AGR liability) leaves limited opportunity for shareholders,” said analysts at Motilal Oswal.

Around 10:30 AM, Vodafone Idea shares were trading 4 per cent up at Rs 9.64 apiece on BSE, as compared to a 0.42 per cent rise in the S&P BSE Sensex.

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Gland Pharma’s grey market premium bounces back strongly ahead of the stock market debut.

Gland Pharma shares have recouped and are again commanding a strong premium in the grey market, days ahead of its trading debut. The largest pharmaceutical initial public offering (IPO) that Indian markets have seen saw a tepid subscription with only Qualified Institutional Buyers (QIB) oversubscribing their portion of the issue while Non-Institutional Investors and Retail Investors distanced themselves from the IPO. Shares of Gland Pharma are expected to be credited to demat accounts tomorrow while trading commences on Friday.

Grey market premium bounces back

After having slipped to merely Rs 10-18 per share, the grey market premium of Gland Pharma has made a sharp U-turn. “Gland Pharma is now once again commanding a premium of Rs 110-120 per share in the grey market,” Narottam Dharawat, founder, Dharawat Securities told Financial Express Online. The price band for the issue was set at Rs 1,490-1,500 per share. Last week the grey market movement of Gland Pharma was lacklustre with the stock trading at a premium of merely Rs 18-20 per share.

What’s pushing the premium

The strong resurgence of the stock is aided by the strong market movement which has taken the benchmark indices to record highs, according to Narottam Dharawat. Gland Pharma also supports strong financials and a leading position in the pharmaceutical industry which has seen a strong growth this fiscal year and is likely to mirror the same going forward. “At the higher price band of Rs 1,500 per share, Gland Pharma’s share is valued at a TTM P/E multiple of 31.7x, which is in-line with pharma industry P/E of 32.3x,” said brokerage and research firm Choice Broking.

Financially, Gland Pharma has reported healthy growth in annual profits. At the end of financial year 2020, Gland Pharma’s net profit stood at Rs 772.8 crore with an operating revenue of Rs 2,633 crore. Majority of Gland’s revenue comes from exports. The pharma firm follows a vertical integration pattern which has helped it grow market share in key markets such as the United States, Europe, Canada and Australia, and the United States.

More institutional buying on cards?

The surge in grey market premium also comes amid expectations of heavy institutional buying. With the outlook for the pharmaceutical industry being strong, Narottam Dharawat said that institutional investors are expected to lap-up more shares of Gland Pharma on listing. With low subscription of retail investors, the selling pressure is expected to be less. Sandip Ginodia, CEO, Abhishek Securities said that the grey market now paints a good enough picture of where the listing of Gland Pharma will be. “This is now the correct picture of the listing. It is likely to be in the region of Rs 100 premium,” he added.

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Economic Indicators: Is it the right time to go stock shopping?

As far as equity markets are concerned, there is not a single dull day as constant highs and lows keep investors in a busy mode. The recent recovery in the markets makes investors wonder about the future direction of the Sensex and Nifty. Let us discuss some of the recent indicators which will help the investors to make an educated guess about the future direction of the stock market.

Market performance
Often stock market indices are considered as the barometer for the economy. In spite of the pandemic and series of lockdown and unlock-down situation, there were as many as 144 scrips where the prices have more than doubled while around 330 generated more than 50% returns. In spite of a pandemic year, both Sensex and Nifty are showing good numbers.

Multiple signs of recovery
The economy is showing multiple signs of recovery in the festival season especially during Diwali. For instance, the value of Unified Payments Interface (UPI) transactions in October is Rs 3.86 lakh crore which is a record high. Purchasing Managers Index (PMI), which is an indicator to measure the financial health of both the manufacturing and the service sectors has seen a rebound. PMI helps investors to confirm information about the economy. GST collections in October exceeded Rs 1 lakh crore and record e-way bills were generated during October owing to the festival season. Further, car sales got a boost again owing to the festivals.

Exim numbers shows signs of rebound
For the first time in the last seven months, i.e., during September, exports rose by 6% to $27.6 billion and at the same time imports fell by 19.6% to $30.3 billion. Thus, the trade deficit narrowed sharply to $2.7 billion from $6.8 billion in August.

Unemployment rate dips
According to the Periodic Labour Force Survey report, unemployment rate in urban areas moderated to 8.4% in July-September compared to 8.9% in April-June 2020. Further, urban unemployment in the age group of 15-29 years grew 20.6% in July-September which is lower than 21.6% in the previous quarter. During the same period female unemployment rate dropped 1.6%. For male agricultural labourers, the average wage in rural India has increased almost 28% during the last five years. At the same time, for male non-agricultural labourers average wages rose around 24%. Karnataka state records the highest increase in wages at 42.3%.

IPO statistics
Whenever optimism prevails, there comes a slew of initial public offerings (IPOs). The Indian primary market has seen 24 IPOs during this year until now. There were four IPOs in the third quarter of 2020 by companies in sectors such as real estate, hospitals, construction, technology and communication, etc. Europe, Middle East, India and Africa accounted for 15% share of the global IPO market. However, India stood at number nine in the global IPO markets. The over-subscription levels and listing gains observed in the recent Indian IPOs sends a positive signal about the economy.

To conclude, if one looks at the market holistically, all the indicators we have discussed above indicate a positive direction. So, investors should pick stocks as per their risk appetite.

Reading the signs

Prices of 144 scrips have more than doubled; around 330 shares have generated more than 50% returns

The value of Unified Payments Interface (UPI) transactions in October is Rs 3.86 lakh crore which is a record high
Purchasing Managers Index (PMI), which is an indicator to measure the financial health of the manufacturing and service sectors, has seen a rebound
Exports rose 6% to $27.6 billion in September. Imports fell by 19.6% to $30.3 billion

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Asian shares slip on faltering hopes for COVID-19 vaccines

Stocks fell back across Asia on Thursday after gains for big technology shares pushed most Wall Street benchmarks higher. News of potentially effective vaccines for COVID-19 has been countered by concerns over the logistical challenges of ensuring access to billions of people and over rising caseloads that are leading governments to re-instate restrictions on business and other activities to battle the pandemic.

Vaccine trades reversed to give way to ‘stay home’ trades” as shares of companies that do well when people stay home and work remotely rallied, Mizuho Bank said in a commentary. But it added, ”Fact of the matter is, progress on vaccine development is at worst two steps forward one step back, and not one step forward and two steps back on a sustained basis.”

Tokyo’s Nikkei 225 index gained 0.4% to 25,459.13 despite a report that machinery orders fell in September, suggesting weakness in corporate investment. But the mood was more sombre elsewhere in Asia. Hong Kong’s Hang Seng index fell 0.1% to 26,206.78 and the Shanghai Composite index declined 0.3% to 3,332.24. In Seoul, the Kospi gave up 0.2% to 2,480.95. Australia’s S&P/ASX 200 slipped 0.2% to 6434.60.

The Dow Jones Industrial Average edged 0.1% lower, to 29,397.63, dragged back by weaker prices for companies like American Express and Walt Disney, that had shot up this week after news of a potentially successful vaccine sent travel, entertainment and tourism companies surging.

The Dow declined shortly after news crossed that New York would put restrictions on bars, restaurants and gyms as COVID-19 infections rose in the state. Markets have been riding a wave of relief over hopes for a potential vaccine to beat back the pandemic. The S&P 500 rose 0.8%, to 3,572.66 and is just 8 points below the record high it set in September. The technology-heavy Nasdaq composite rose 2%, to 11,786.43.

While several significant risks remain for Wall Street broadly, the optimistic case that investors are embracing is that one or more coronavirus vaccines could help corral the virus by the second half of next year, encouraging people to return to life as it was before the pandemic.

All that economic activity would come on top of the tremendous aid that the Federal Reserve and other central banks around the world are pumping into the economy through very low interest rates and massive purchases of bonds. Hope also remains that the US government may eventually deliver some form of support for the economy, though its total size would likely be smaller than if Democrats had swept this month’s elections.

Strategists along Wall Street are raising their forecasts for stock prices on expectations that political control of Washington will remain split between the parties. Republicans look set to keep the Senate, as long as runoff elections go their way in Georgia in January, while Democrats will hold the House of Representatives.

Democrat Joe Biden has clinched enough electoral votes to win the White House, clearing some of the uncertainty that weighed on the market through the vicious campaign. Even though President Donald Trump has refused to concede, investors are ignoring his complaints so far. They’re instead working on the assumption that a split

Washington under Biden could keep tax rates low while offering more steady and predictable policies. Those expected results helped push strategists at Goldman Sachs to raise their forecast for the S&P 500 at the end of this year to 3,700 from 3,600. That would imply another 4.4% climb from Tuesday’s closing level. They expect it to rally another 16% through 2021. But the biggest driver for that is the hope for a return to normal life, rather than what happens in Washington.

In other trading, benchmark US crude oil picked up 19 cents to $41.64 per barrel in electronic trading on the New York Mercantile Exchange. It climbed 9 cents to $41.45 on Wednesday. Brent crude, the international standard, added 17 cents to $43.97 per barrel. The US dollar weakened to 105.31 Japanese yen from 105.42 yen. The euro rose to $1.1781 from $1.1776.

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