Street signs: Price hike boost for paint stocks, Shyam Metalics IPO & more

Price hike boost for paint stocks
 
 Paint companies have initiated material price hikes in a phased manner in the first quarter of FY22. Despite the hikes, there is negligible impact on volumes so far. Analysts said most unorganised players will still seeing losses or generating negligible profits, while larger players will continue to gain market share even after raising prices. Akzo Nobel, Asian Paints, Kansai Nerolac, and Indigo Paints are likely to benefit. But analysts cautioned that it is too early to assume that price hikes won't impact volumes. "We believe the real impact of price hikes will be observed only in Q2FY22, after re-opening of the markets," a note from ICICI Securities said.          

 
Index rejig trade goes awry
 

Several traders were caught on the wrong foot due to the fall in shares of Tata Steel on Friday. They had built long positions in anticipation that the stock would gain on the back of buying by exchange-traded funds (ETFs), on account of its inclusion in the Sensex and FTSE indices. Tata Steel replaces ONGC in the benchmark Sensex on Monday. However, the effective date for rebalancing for ETFs and index funds was Friday. In other words, they had to sell their ONGC holdings and buy Tata Steel. Analysts had pegged inflows to the tune of Rs 1,200 crore in the stock. Shares of Tata Steel tanked as much as 5 per cent on Friday amid a selloff in global commodities. The stock, however, recouped most of the losses but still ended 1.1 per cent lower.

 
Shyam Metalics: Close shave for HNIs?
 
High net-worth individuals (HNI) mounted aggressive bets worth over Rs 46,000 crore on the IPO of Shyam Metalics and Energy. Demand exceeded supply in the HNI portion by nearly 340 times. The price band for the IPO was set at Rs 303-306 per share. After factoring in the borrowing cost, the break-even price for HNIs works out to Rs 440 per share, a premium of 45 per cent to the issue price. “HNIs face the risk of losing money as the grey market premium has crashed due to weakness in the market last week, particularly in the metal stocks,” said a market player, adding that the current activity in the grey market suggests the stock will list in the range of Rs 400-420.