Street signs: Liquidity boost for markets, shares of MNCs, and more

Liquidity boost for markets

The market could get a shot in the arm with Rs 2 trillion worth of liquidity entering the system, say market players. The gush of the money is on account of refunds to investors who applied in the Rs 10,300-crore initial public offering (IPO) of SBI Cards, which saw 27 times more demand the shares on offer. The SBI Cards’ IPO closed on March 5, and since then the market has come off 11 per cent. About Rs 1.05 trillion worth of ­­institutional money and another Rs 90,000 crore worth of high net-worth individuals’ bets were riding on the IPO. “The refund for SBI Cards issue has taken place on Friday. If markets stabilise, some of these funds will find their way into the market,” said an analyst.   --Samie Modak

Trading curb a blessing for DMart
 

The move by stock exchanges to shift the scrip of Avenue Supermarts to the so-called trade-to-trade (T2T) category earlier this month surprised the Street. However, this was as a blessing for the company, which operates the highly successful DMart retail chain. Since March 2, shares of Avenue Supermarts are down 6 per cent, as against a 11 per cent decline in the benchmark Nifty.  Under the T2T segment, a stock has to be compulsorily marked for delivery. Typically, stocks that see excessive speculative activity are moved to this segment. Though Avenue Supermarts has outperformed the market this month, it has come off 17 per cent from its peak — the same as the Nifty.  -- Sundar Sethuraman

MNC stocks seen as safe haven  
 

Shares of multinational companies (MNCs) have emerged as safer bets in the current market selloff. Since February 20, the Nifty has corrected 17 per cent, while an index of MNC companies has fallen about 12 per cent. Analysts say investors can look at MNCs with less debt and those that have demonstrated good earnings growth in the past three years. “MNC stocks have done well even in challenging environments. Also, the drop in stock prices might prompt foreign parents to up their stakes in their domestic arm. Low interest rates globally makes buybacks or open offers a very attractive proposition to MNC promoters,” said an analyst. --Ashok Divase