Sensex Slip On Profit Booking, Metal Index Down 1.8%

After opening the trading day on a cautious note, Indian markets witness selling momentum in morning trade amid weak global markets. Losses are largely seen in oil & gas stocks and metal stocks.

The BSE Sensex is trading lower by 140 points and the NSE Nifty is trading lower by 42 points. The BSE Mid Cap index is trading down by 0.5% while the BSE Small Cap index is trading lower by 0.8%. The rupee is trading at 66.63 to the US$.

Retail companies trading higher ahead of the Rs 18.7 billion initial public offering (IPO) of Avenue Supermarts Ltd, parent of D-Mart. Avenue Supermarts Limited (ASL) is an emerging national supermarket chain with a focus on value-retailing.

It is one of the most profitable Food and Groceries retailer in India. The company opened its first store (D’Mart) in Mumbai in 2002. As on December 31, 2016, the store count has increased to 117 with a retail business area of 3.57 million sq. ft.

We, at Equitymaster, have always recommended IPOs cautiously. Here’s Rahul Shah, co-head of research at Equitymaster, explaining our rationale behind the approach:

‘We know what a dirty game the IPO business is. We’ve seen it over and over again: It’s a game where the odds are stacked against investors. So for us, the equation is simple. We’d rather face criticism in the short run than see our subscribers lose money over the longer term. We weren’t afraid to do this during the hot IPO days of 2007, and we’re not afraid to do it today.’

The Bottomline: You need to evaluate each IPO on its merits by considering its fundamentals, and most importantly, the valuations. And this is particularly important when the hype surrounding IPOs is at its peak.

And if you wish to run IPOs through a handy checklist, you can download our Handbook of IPOs to pick only the right ones for you.

Moving on to news from IT stocks. According to an article in The Business Standard, as companies redeploy employees on various new technology works, campus hiring is expected to drop. Infosys said it hired 5,500 people in the first nine months of this financial year, as against 17,500 people in the year-ago period. It is expected to reduce campus hiring this year.