Markets ended higher compared to yesterday’s closing point. Nifty and Sensex opened higher and closed in green.
Metal stocks and FMCG stocks rose the most today. IT stocks and media stocks fell the most.
Global markets: US markets ended mixed on Tuesday. Most Asian markets were mixed on Wednesday. Most European markets traded in red (as of 6 pm IST).
News
The government signed a contract with Bharat Dynamics worth Rs 810.79 crore for 160 Satellite Smart Anti Airfield Weapons and associated equipment.
All PSU Banks and regional rural banks will be open on Sunday, 27 Sep ahead of the nationwide bank strike from 28 Sep to 30 Sep.
The government connected a remote area in South Chhattisgarh through a new rail line that will facilitate iron ore transportation to Bhilai Steel Plant.
IPO Corner
Varmora Granito’s Rs 1,096.04 crore IPO was subscribed 0.27 times on day 2. Retail subscription: 0.40 times. The IPO will close for subscription on 24 September.
Elevate Campuses Rs 2,100 crore IPO was subscribed 0.20 times on day 1. Retail subscription: 0.13 times. The IPO will close for subscription on 25 September.
SS Retail listed at Rs 624 on NSE, a premium of 47.17% over its issue price and closed 76.60% higher.
Jindal Supreme (India) Ltd listed at Rs 120 on NSE, a premium of 29.03% over its issue price and closed 35.48% higher.
Hero Motors listed at Rs 82 on NSE, a discount of 2.38% below its issue price and closed 17.14% higher.
Stock Updates
Shriram Finance: received GST orders worth around Rs 11.18 crore relating to its erstwhile Shriram City Union Finance business.
Grasim: invested about Rs 235 crore in subsidiary Aditya Birla Renewables through a preferential share allotment. The investment plan had been announced earlier.
Samvardhana Motherson: set up MH Supply Chain Ltd in the US through its logistics joint venture with Hellmann Worldwide Logistics. The company will provide logistics and supply-chain services, mainly for the automotive industry.
Aditya Birla Capital: raised Rs 192 crore through unsecured subordinated NCDs at an 8.0668% interest rate. The bonds will mature in April 2036.
Bharat Forge: completed its QIP and raised Rs 2,000 crore by issuing about 1.06 crore shares at Rs 1,890 each. The Government of Singapore received about 16.8% of the shares issued in the QIP.
REC: subsidiary RECPDCL transferred two transmission projects to Power Grid and Ashoka Buildcon for about Rs 18.98 crore and Rs 3.06 crore, respectively.
Word of the Day
Floating Interest Rate
These are loan or deposit interest rates that change with time
The way they work is there is a benchmark index (which changes based on some factors like repo rate set by the RBI, etc).
On top of the benchmark interest rate, a margin is added which is called spread.
So, say a person has taken a home loan at (benchmark + 2)% interest rate.
This means the interest rate applicable on his loan will always move according to the benchmark interest rate + 2%.
Most home, and education loans these days have a floating interest rate.
Personal loans and vehicle loans usually have fixed interest rates — which means the rate does not change and remains fixed for the entire duration of the loan.
6 Day Course
Theme: how fund managers handle money
Day 3: Wednesday
When we talk about cash in mutual funds, the money is not literally kept as cash in a current bank account.
This money is invested in extremely safe options from where money can be withdrawn very fast.
One example is RBI monitored overnight lending options like TREPs.
T-Bills or Treasuring Bills offered by the RBI is another location for storing this cash.
Commercial papers and certificates of deposit are also used.
Some might use other funds like liquid funds and overnight funds to store this cash.
This way, the cash is at least able to earn a small return instead of 0%.
Featured Question
Q. “IPO comes with a price band. Whether any action can be taken against a company by SEBI if the listing price goes down very much below the minimum price for any reason? Can the IPO be kept in any abeyance ?”
Each company is different and we do not know how much its shares should be priced.
So shares are offered in the share markets (via an IPO) and the price is decided based on demand and supply.
When a company goes for an IPO, it is trying to estimate this price.
The price band on offer is generally speaking the price range the company thinks is the right price for its shares.
This is never a 100% sure process. Companies can be inaccurate about their estimates.
After the share lists, supply and demand can change the price.
When a company underestimates its share price, the share price moves up after listing.
When a company overestimates its share price, the share price moves down after listing.
In both cases, the price of the share after listing can easily fall outside the price band during the IPO. There is nothing illegal about it.
This is why investors must be careful while investing in IPOs. They must ensure that they are not investing in a company that is overestimating its share price.
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