Street Signs: Shriram Finance and NTPC in spotlight, IPO blues, and more

According to IIFL Alternatives, Shriram Finance is expected to see inflows of nearly Rs 1,300 cr (over 3 days of volumes), while UPL could see outflows of over Rs 700 cr (nearly 5 days of volumes)

Nifty shake-up: Shriram Finance and NTPC in the spotlight

Shriram Finance, NTPC, and several other companies impacted by the latest rebalancing in the National Stock Exchange Nifty indices will be in focus when trading resumes on Tuesday. According to a note by IIFL Alternatives, Shriram Finance is expected to see inflows of nearly Rs 1,300 crore (over three days of volumes), while UPL could see outflows of over Rs 700 crore (nearly five days of volumes) due to their addition and deletion from the Nifty 50 index. Among the public sector undertaking pack, NTPC (Rs 750 crore), Power Finance Corporation (Rs 600 crore), and REC (Rs 600 crore) are expected to experience the highest flows. Analysts said stocks that are getting included or seeing an increase in their weighting could outperform. On the other hand, those getting excluded or seeing a reduction in weighting will underperform. Brokerages are recommending “basket trade” strategies based on this scenario. The adjustment day for the rebalancing is on Wednesday.

FPI alert: Breaching the 3% mark

Under the newly introduced norms, foreign portfolio investors (FPIs) with more than half of their domestic exposure in a single corporate group have to make additional disclosures. However, the market regulator has allowed certain exemptions to FPIs even if they breach the 50 per cent threshold. The Securities and Exchange Board of India has stated that FPIs will be allowed to hold more than 50 per cent in such group companies where the apex or parent firm has ‘no identified promoter’ as long as their composite holding of such FPIs doesn’t breach the 3 per cent mark. The National Securities Depository (NSDL) has been tasked with monitoring such breaches. Recently, it published the list where the composite holding of high single-group exposure FPIs has been breached. Ujjivan Financial Services and RBL Bank were the only two names on the list. Now, the FPI holding in these companies either needs to get realigned or overseas funds will have to furnish more details. NSDL has issued a list of 142 apex/parent companies with ‘no identified promoter’.

IPO blues: 5 companies sink below issue price

Shares of the previous five companies, which made their debuts on the bourses following their initial public offerings (IPOs), have sunk below their issue price. Krystal Integrated Services, RK Swamy, JG Chemicals, Gopal Snacks, and Popular Vehicles & Services are the companies where IPO subscribers have suffered losses. This is the worst streak since at least 2018. Back then, Hindustan Aeronautics, Sandhar Technologies, Karda Construction, ICICI Securities, and Mishra Dhatu Nigam (Midhani) had all slipped below their issue price during the first trading day, according to information available on the IPO portal Chittorgarh. Although Midhani managed to close at its IPO price, IPO activity slumped during the subsequent year (2019) following the spate of weak listings. It remains to be seen how the current poor spell impacts maiden share sales.