Prabhat Dairy’s initial public offering (IPO) managed to sail through on Friday, after the issue was extended by three days and its price band lowered. The issue received muted response in the aftermath of a selloff in global equities.

Merchant bankers to the issue claimed that the IPO’s fresh issue was subscribed more than one time, thus meeting the capital market regulator’s minimum subscription provisions.

According to the Issue of Capital and Disclosure Requirement (ICDR), a company is required to achieve minimum subscription clause of 90% of the fresh offer size.

Overall, the issue was subscribed 0.77 times without a single bid from FIIs, data from stock exchanges showed. The non-institutional book comprising HNIs was subscribed 1.42 times and the retail portion got just 0.34 times demand against the shares reserved for the category. “The issue has successfully gone through,” said Vikas Khemani, CEO, Edelweiss Financial Services. “Given the recent developments in global markets and the selloff thereafter, the IPO has done well,” Khemani said.

Prabhat Dairy’s IPO included a fresh issue of nearly 2.65 core shares worth R300 crore and an offer for sale of 1.47 crore shares from existing investors.

The IPO was extended by three days as the issue failed to get fully subscribed as on September 1 — the final day of offering. The price band has been revised to R115-126  from the original band of R140-147 per share. As a result, the overall issue size was lowered to R485.22 crore from R516 crore. However, the size of fresh issue — R300 crore — remained intact.

Maintain ‘outperform’ on Bharat Electronics (BEL) on signs of revival in order inflow. We expect earnings to register a CAGR of 10% over FY15-17 and see the pace increasing thereafter as execution picks up.

The stock trades at 18x FY17E earnings, which we believe is attractive given the long-term earnings potential.

Defence spend is seeing an uptick due to government focus on modernizing the defence forces, which is visible in the faster project clearances by the DAC. Given leadership in the defence electronics segment and focus on R&D (8% of FY15 revenues), BEL is well-positioned to capture the growing defence spend. We believe BEL’s order backlog of R21,000 crore (~3x FY15 revenues) provides strong visibility of revenues and earnings.

After a lull in order intake momentum over the past 3-4 years (~R5,000 crore per annum), BEL’s order intake is likely to cross R10,000 crore (up 95% y-o-y) in FY16 as decision-making on defence procurement has been improving. BEL has seen intake of R2,300 crore year-to-date and is L1 in an order worth R7,000 crore (Integrated Air Force Command and control system – IACCS).

The government’s focus on improving and modernising the defence forces has led to faster decision-making on procurement. This is reflected in a pick-up in project approvals by the Defence Acquisition Council.

Amid concerns in India and other global markets about uncertainty over a rate hike in the US, RBI Governor Raghuram Rajan today sought to play down fears saying markets should not be scared of volatility as it would be transient in nature. (Express Photo)

Amid concerns in India and other global markets about uncertainty over a rate hike in the US, RBI Governor Raghuram Rajan today sought to play down fears saying markets should not be scared of volatility as it would be transient in nature.

He also said finance “is only a lubricant to growth” and it would be the overall economic policies of the countries that would determine their basic growth momentum.

Addressing the plenary session of the B20 meet, an informal grouping of business leaders from G20 countries, Rajan referred to issues facing the global economy and said the problems include people saving more and spending less, low productivity and low investments.

But the solution is that “we should not be scared of volatility”, he said.

Referring to uncertainties about a rate hike in the US, he said return to monetary policy normalcy would address the concerns over volatility in the future.

Rajan also warned that the central banks globally might have engendered excessive fragility in the system.

The B20 grouping engages with the G20 governments on behalf of the international business community and it is organising its own meeting here on the sidelines of the G20 minister-level meetings.

The other panelists in the session on ‘navigating through the global low growth and low interest rate environment’ included IMF chief Christine Lagarde as also the central bank governors of France, Turkey and Mexico.

Lagarde said the G20 leaders need to respond to the calls for creating jobs.

On what was holding back the investments, the panelists named lower global growth prospects and structural confidence related aspects such as business environment.

Lagarde emphasised on three broad areas — efficient investment in infrastructure, financial reforms and labour and product market reforms. The panelists observed that the global economy is recovering at a moderate pace since the end of the global financial crisis.

In order to support the recovery, monetary policy in the developed world has remained accommodative through lower policy rates and expanded central bank balance sheets, they said.

They felt that this has led to not only lower short-term interest rates but also lower long-term interest rates. Despite recent prospects of policy normalisation in some advanced economies, interest rates are likely to stay low in the coming years as well, reflecting the downward revised growth potential and very low inflation rates especially in the developed economies.

This environment coupled with slowing productivity growth and low investment rates poses challenges for central banks across the world.

Extraordinarily low interest rates for an exceptionally long time, in nominal and inflation-adjusted terms, raises questions about its efficacy, its potential threats for financial stability and hence the need for an expanded set of policy tools.

The benchmark BSE Sensex plunged over 521 points and the NSE Nifty fell below 7,700-mark in early trade. (Reuters)

The BSE Sensex and NSE Nifty opened on a negative note on Friday following global cues amid sustained capital outflows by foreign funds. The benchmark BSE Sensex plunged over 521 points and the NSE Nifty fell below 7,700-mark in early trade.

At 10.59 am, Sensex was down 553.69 points at 25,211.09. Similarly, Nifty was down 169.10 points at 7,653.90 during the same time.

Below are the five reasons why Sensex fell above 500 points today:

1.Global markets: Mixed trends across global markets affected the market sentiments. Asian markets were trading weak as investors turned cautious ahead of the US job data to be released later in the day, also triggered selling by participants. US stocks ended slightly higher as investors looked toward a key US jobs report. The European Central Bank indicating that it could expand its stimulus also weighed on the market sentiment.

2.Monsoon deficit: Fears of poor agriculture output as monsoon deficit widened triggered selling in stocks.

3.Profit-booking by speculators and sustained capital outflows by foreign funds.

4.Indian rupee low: Indian rupee was trading lower on Friday. At 10.39 am, Indian rupee was down 26 paise at 66.38 against the dollar on fresh bouts of dollar demand amid volatile equities.

5. The FIIs were net sellers in the cash market segment on 03 September 2015, Wednesday sold shares worth Rs 1525.14 crore.

“Globally, markets are very choppy and China markets are Closed. The US market will be closed on Monday on account of Labour Day. So, there is a lack of depth. In uncertain scenario traders dont like to carry on long positions, with China being favourite for the hedge traders. If they have to sell, they will look towrads Indian market,” Ajay Jaiswal, head of research at Kolkata-based Microsec Capital, said.
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