Market recap for 19 January 2021

 

 

Nifty50: 14,521 ▲ 239 (+1.6%)

  Sensex: 49,398 ▲ 834 (+1.7%)

The markets opened with a gap-up and continued to rise for the rest of the day. The recovery was sharp after a two-day fall, with 46 out of the Nifty50 stocks closing in the green. 

All sectoral indices closed positive with most gains seen in the Nifty Realty (+4.1%) and Nifty Metal (+2.4%) indices. 

Top gainers	Today's change
Bajaj Fin Serv	▲ 6.7%
Bajaj Finance	▲ 5.2%
Tata Motors	▲ 5.2%

 

Top losers	Today's change
ITC	▼ 0.3%
Tech Mahindra	▼ 0.2%
Britannia	▼ 0.0%

 

Here are the top stories of the day.

Paint stocks rise ahead of Indigo paints IPO

• India’s fifth-largest decorative paint maker, Indigo Paints, opens its ₹1,170 crore issue for application tomorrow. The price band is fixed at ₹1,488-1,490.
• Meanwhile, shares of other major paint makers were upbeat today with Akzo Nobel (+3.3%), Asian Paints (+2.4%) and Berger Paints (+1.9%) seeing gains. Even the smaller-sized Shalimar Paints (13.7%) saw a sharp rise today. The pick-up in demand in the real estate sector also augurs well for the paint industry. 

 

Escorts gets nod for electric tractors

• Escorts has become the first Indian tractor manufacturer to receive permission to sell electric tractors in the country. The company has been exporting its electric tractors since 2019.
• Shares of the tractor maker gained 0.3% today. While Escorts’ tractor sales volumes are seeing strong growth, it seems investors are choosing to book profits. Shares of Escorts fell 4.4% in Q3, whereas the Nifty Auto index was up nearly 16% in the same period.

 

Bank of Maharashtra rises on improved net profit

• State-owned Bank of Maharashtra reported 14% YoY rise in Q3 net profit to ₹154 crore and 10% YoY rise in net interest income to ₹1,306 crore. 
• Its asset quality improved with net NPA at 2.59% in Q3 versus 3.30% in Q2 and 5.46% in Q3 last year. Its shares surged 7.4% today, coupled with high volumes. The central government owns 93.3% shares, and 2.3% is held by LIC, suggesting a shortage of float in case the demand for the stock rises.

 

Alembic gains on growth in formulation business

• The Vadodara-based pharma player posted a net profit of ₹259.2 crore for Q3, a 14% YoY growth. Its revenues from operations stood at ₹1,314 crore, a 9% YoY growth.
• The company attributed its growth to the 14% rise in its India formulations business, which stood at ₹418 crore. Meanwhile, its specialty segment and API business gained 16% and 21%, respectively. The positive results notwithstanding, the stock fell 3.2% today.

 

Closing bell

Most Asian indices (including Indian indices) rose sharply today ahead of US Treasury secretary nominee Janet Yellen’s speech. She is expected to call for generous government action to boost the economy. In anticipation, gold and silver prices also rose nearly 0.4% and 1.8%, respectively.

What is surprising is that the major European indices are trading flat as of now. Meanwhile, the India VIX, which was down more than 15% intraday, jumped and closed 6% lower than yesterday. Traders must be prepared for volatility in the days ahead. 

Good to know

What is a free float?

The free float represents the portion of shares of a company that are in the hands of public investors (retail & institutional) as opposed to the locked-in shares held by promoters or, in case of public sector enterprises, the government.

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Morning update for 19 January 2021

Indices at 10:00 am

           Nifty50 14,379 ▲ 98 (+0.6%)

               Sensex 48,951 ▲ 387 (+0.8%)

       Nifty Bank 31,967 ▲ 156 (+0.4%)

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In the news

Mindtree Q3 earnings beat expectations

• The Bengaluru-based IT firm’s Q3 net profit grew 28.7% QoQ to ₹326 crore.  Margin expansion by 350 bps to 23.5% aided profits. Meanwhile, its revenues rose 5% over Q2 to ₹2,023.7 crore better than street estimates of ₹1,995 crore.
• The company added eight new clients and bagged deals worth $312 million in Q3. The stock is up 2.6% today and gained nearly 24% in Q3.

 

Indiabulls charges ahead on upbeat Q3

• Mumbai-based Indiabulls Real Estate reported a 64% YoY rise in consolidated net profit to ₹80 crore even as its revenue dipped by 42% YoY to ₹756 crore. 
• Its shares rose 12.1% today after the company said that affordability of real estate is at a multi-year high owing to declining interest rates. Further, the company added that it was seeing high demand for its completed projects. 

 

IRB Infra Q3 profit declines

• The highway infrastructure company's consolidated profits fell 56% YoY to  ₹69 crore in Q3. However, the company reported a recovery on a sequential basis, and was able to recoup all the losses of the first half of FY21. At ₹1,595 crore, the company's revenues dropped by 11% during the same period. 
• The company mentioned that toll collections are now above pre-Covid levels and it is seeing a strong recovery in the construction segment. Its shares rose 0.7% today. 

 

China rises amid global slump

• The Chinese economy grew by 2.3% in 2020, the slowest pace in the last 44 years. However, it is expected to be the only major economy to show positive growth in the pandemic-hit year.
• While the economy contracted 6.8% in the January to March quarter, it quickly rebounded from the second quarter of calendar year and grew at 6.5% in the September-December quarter. China’s GDP now stands at $15.4 trillion. Chinese benchmark equity index SSE composite rose nearly 14% in 2020.

 

Gold gains on stimulus hopes

• The street is hopeful that the Biden administration in the US will provide additional economic stimulus and that the Fed policy would continue to remain accommodative.
• The resultant boost in liquidity could continue to provide support to gold prices as the yellow metal acts as a hedge against inflation. Gold prices recovered nearly 2% from yesterday’s low. 

 

Events this week

• Wednesday: Indigo Paints IPO opens (India)
• Thursday: Home First Finance IPO opens (India), Initial Jobless claims (US)

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Sectoral indices

Top gainers	Top losers
Nifty Realty ▲ 4.7%	NA
Nifty Media ▲ 2.2%	NA

 

Global markets	Today's movement
Nikkei 225 (Japan)	▲ 1.3%
Hang Seng (Hong Kong)	▲ 3.0%
SSE Composite (China)	▼ 0.0%
Dow Jones (US) (15 Jan)	▼ 0.5%

Fact of the day

Although no longer connected to the beer company, Guinness World Records was founded by the managing director of Guinness Brewery in the 1950s.
Source: History.com

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We'd love your thoughts on this morning update.

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Top Stocks to Watch on January 19 2021

 Results on January 19 2021

• ICICI Lombard General Insurance Company
• Alembic Pharmaceuticlas
• ceat
• CSB Bank
• DCM Shriram
• L&T info tech
• Skipper
• Tata Communication
• Tata Metaliks
• Tata Steel BSL
• Gateway Distriparks
• Hatsun Agro PRoducts
• HT Media
• JSW Ispat Special Products
• Bank of Maharastra
• Mold Tek Packaging
• Network18 Media & Investments
• Roselabs Finance
• TV18 Broadcast
• Vardhaman Special Steels
• Raghav Productivity Enhancers
• Shree Ganesh Biotech
• Ward wizard Innovations & Mobility
• Add-shop E Retail
• AVI Polymers and Big Bloc Construction

Stocks To Watch

Mindtree: the company has reported a sharply higher profit of 326.5 crores in Q3FY21 Against 253.7 Crore, Revenue Rose to 2023.7crore from 1926 crore QoQ

Maruthi Suzuki: the company increased prices by up to Rs 34,000 Ex-showroom in Delhi effective from January 18

Chola: Arun alagappan tendered his Resignation as MD and Director of the company

Adani: Adani trading Services LLP sold 36,147,571 crore Equity shares in the company at 915.37 per share. ACME Trade and Investment was the buyer in the Deal

Hindustan Media Ventures Ltd.: the company reported Consolidated profit at 34.28 Crore in Q3FY21 against 32.09 crores in Q3FY20, Revenue fell to 162.6 Crore from Rs 208.48 Crore. 

Tamilnadu Newsprint & papers: Thiru R Ramasheshan resigned as Executive Director (Finance) & Chief Financial officer of the company. 

Hazoor Multi Projects: the company has received a work order of Rs. 6.81 crore from Varaha Infra and 8.16 crore from navayuga engineering Company.

Apollo Hospitals: The company opened its QIP issue on January 18 and Fixed the floor price at Rs. 2508.58 per Equity share.

Coramandal Engineering Company: K Thiyagarajan resigned as chief financial officer of the company. 

Gail (India) Limited: The Board has unanimously approved a proposal for the buyback of 6,97,56,641 equity shares at a price of Rs.150 per share, for up to 1046.35 Crore

India Mart: The company reported a higher profit of Rs80.2 Crore in Q3Fy21 Against Rs.62 Crore in Q3FY20 Revenue Jumped to Rs173.6 Crores

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Market recap for 18 January 2021

Nifty50: 14,281 ▼ 152 (-1.0%)

Sensex: 48,564 ▼ 470 (-0.9%)

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The markets started on a weak note and continued to slide downward for the rest of the day. Market breadth was negative with 44 of the Nifty50 stocks closing in the red. 

All sectoral indices ended negative with the most pain seen in Nifty Metal (-4.0%) and Nifty Pharma (-2.7%). 

Top gainers	Today's change
UPL	▲ 6.2%
Reliance	▲ 1.8%
Titan	▲ 1.4%

 

Top losers	Today's change
Tata Motors	▼ 6.0%
Tata Steel	▼ 5.7%
ONGC	▼ 4.9%

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Here are the top stories of the day.

L&T Finance Holdings recedes on weak Q3

• Shares of L&T Finance Holdings fell 6% today as it reported a 51% decline in consolidated net profit for Q3 owing to higher expenses. Its net profit plunged to ₹287 crore from ₹591 crore in Q3 last year. 
• Meanwhile, the company achieved a 51% QoQ growth in disbursements, the highest quarterly disbursement since Q1FY20, driven by rural and infra sector lending.

 

Trident reports bumper Q3 profits 

• The textile maker reported a consolidated net profit of ₹112 crore for the third quarter, a 200% surge from ₹37 crore in the same period last year. The company reported a consolidated revenue of ₹1,303 crore, a 20% YoY increase. 
• Recently, the company secured a patent in Europe for a method of manufacturing fabric, which is used in making soft towels. The shares of the company have gained about 39% in January and were up 1.3% today.

 

L&T wins big-ticket rail project

• The construction arm of L&T has bagged a large project from the Rail Vikas Nigam in Uttarakhand. 
• The project, which is for constructing a broad-gauge line between Rishikesh and Karanprayag, is estimated to be valued between ₹2,500 and 5,000 crore. The company aims to complete the project in 60 months. 
• Amid a weak market, L&T’s shares were down 1.9% today.

 

DHFL soars on Piramal takeover

• Shares of the troubled NBFC were locked in its 5% upper circuit after its creditors approved the ₹37,250 crore resolution plan submitted by Piramal Capital and Housing Finance.
• Besides the Piramal Group, the Adani Group and US-based Oaktree Capital Management were also bidders for the company. In Q3, shares of DHFL have risen by 130% in anticipation of a potential deal.

 

Closing bell

The markets witnessed across-the-board selling today. Further, the cues from major global equity markets were also negative. Major Indian IT companies have already declared their results, and most of their stocks have succumbed to profit booking after the results. If the stocks of other sectors face a similar fate post results, the markets could weaken further.

The Budget is exactly two weeks away, and before that, the markets have to cross the derivatives expiry hurdle. The India VIX is inching up, indicating heightened volatility in the days ahead

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How to apply for IPO (Initial Public Offer) in Upstox?

 

 

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What is Inflation?

 

Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.

 

Inflation can be contrasted with deflation, which occurs when the purchasing power of money increases and prices decline.

  

Why is 'Inflation' Today’s Term?

 

As the value of the U.S. dollar continues to languish near long-term lows and U.S. government spending is expected to increase significantly with the new administration, analysts and economists have been forecasting a rise in inflation on the horizon. Though inflation currently remains tame, as it has been for much of 2020, we’ve recently seen an uptick in consumer inflation as gasoline and other commodity prices have crept higher.

What does it mean for the typical consumer when inflation rises? It simply means that the value of the currency weakens and consequently, the general level of prices for goods and services rises. Most importantly for consumers, commodity prices climb higher, making critical purchases like food and gas significantly more expensive. For investors, generally speaking, a measured increase in inflation can be positive as it can also lift asset prices. Inflation is detrimental for people holding cash, however, as it erodes the value of their cash holdings.

 

Inflation vs. Deflation

Inflation occurs when the prices of goods and services rise, while deflation occurs when those prices decrease. The balance between these two economic conditions, opposite sides of the same coin, is delicate and an economy can quickly swing from one condition to the other. Central banks keep a keen eye on the levels of price changes and act to stem deflation or inflation by conducting monetary policy, such as setting interest rates. 

Inflation is a quantitative measure of how quickly the price of goods in an economy is increasing. Inflation is caused when goods and services are in high demand, thus creating a drop in availability. Supplies can decrease for many reasons; a natural disaster can wipe out a food crop, a housing boom can exhaust building supplies, etc. Whatever the reason, consumers are willing to pay more for the items they want, causing manufacturers and service providers to charge more. The most common measure of inflation is the consumer price index (CPI). The CPI is a theoretical basket of goods, including consumer goods and services, medical care and transportation costs. The government tracks the price of the goods and services in the basket to get an understanding of the purchasing power of the U.S. dollar.

Inflation is often seen as a big threat, mostly by people who came of age during the late 1970s, when inflation ran wild. So-called hyperinflations occur when the increase in monthly prices exceeds 50% over some period of time. These periods of rapid price increases are often accompanied by a breakdown in the underlying real economy and may also see a sudden increase in the money supply. While hyperinflations can be scary, they are historically rare. In reality, inflation can be either good or bad, depending on the reasons and level of inflation. In fact, a complete lack of inflation can be quite bad for the economy, as we will see below with deflation. A modest amount of inflation can actually encourage spending and investing, as inflation can slowly erode the buying power of cash—so it is relatively less expensive to buy that $1,000 appliance today than the same $1,000 in a year.

Deflation

Deflation occurs when too many goods are available or when there is not enough money circulating to purchase those goods. As a result, the price of goods and services drops. For instance, if a particular type of car becomes highly popular, other manufacturers start to make a similar vehicle to compete. Soon, car companies have more of that vehicle style than they can sell, so they must drop the price to sell the cars. Companies that find themselves stuck with too much inventory must cut costs, which often leads to layoffs. Unemployed individuals do not have enough money available to purchase items; to coax them into buying, prices get lowered, which continues the trend. (Note that deflation is not the same as disinflation, which is a decline in the positive rate of inflation from period to period).

Deflation can lead to an economic recession or depression, and the central banks usually work to stop deflation as soon as it starts.

When credit providers detect a decrease in prices, they often reduce the amount of credit they offer. This creates a credit crunch where consumers cannot access loans to purchase big-ticket items, leaving companies with overstocked inventory and causing further deflation.

Prolonged periods of deflation can stunt economic growth and increase unemployment. Japan's "Lost Decade" is a recent example of the negative effects of deflation.

Just as out of control hyperinflation is bad, uncontrolled price declines can lead to damaging a deflationary spiral. This situation typically occurs during periods of economic crisis, such as a recession or depression, as economic output slows and demand for investment and consumption dries up. This may lead to an overall decline in asset prices as producers are forced to liquidate inventories that people no longer want to buy.

Consumers and businesses alike begin holding on to liquid money reserves to cushion against further financial loss. As more money is saved, less money is spent, further decreasing aggregate demand. At this point, people's expectations regarding future inflation are also lowered and they begin to hoard money. Consumers have less incentive to spend money today when they can reasonably expect that their money will have more purchasing power tomorrow.

 

 

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Upstox Demat Account Opening Process - Step By Step

 Demat Account opening Process 

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Market Recap for 12 January 2020

 

 

Nifty 14,563

▲ 78 (+0.5%)

Sensex 49,517 ▲ 247 (+0.5%)

After a shaky start, the markets resumed their upward march and remained firm till the closing bell rang. Among the sectoral indices, Nifty PSU Bank (+5.9%) and Nifty Realty (+2.7%) were the top gainers, whereas Nifty Pharma (-1.2%) and Nifty FMCG (-0.5%) were the top losers.

Top gainers (Nifty50) Tata Motors ▲ 7.5% GAIL ▲ 4.6% Bharti Airtel ▲ 3.9% Top losers (Nifty50) Asian Paints ▼ 3.2% Titan ▼ 2.1% Nestle India ▼ 2.1%

Here are the top stories of the day. Sunteck gains as new bookings rise Mumbai-based Sunteck Realty saw a sharp recovery in new bookings to ₹349 crore, up 75% QoQ and 7% YoY. The company believes that the reduction in stamp duty and low interest rates are expediting home-purchase decisions. As construction activity returns to pre-COVID levels, the company is accelerating its work on projects to make up for lost time. The stock gained 1.7% today.

PSU banks see high investor interest As per RBI’s Financial Stability Report, PSU banks are seeing a steady uptick in credit growth. Loans grew 4.6% YoY in September 2020, as compared to 3% in March 2020. Further, the rebound in the overall economic scenario not only augurs well for new loans but also increases the likelihood of an improvement in asset quality. Shares of PSU banks such as SBI (+3.7%), PNB (+4.3%), Bank of Baroda (+10.6%), Canara Bank (+6.8%) and Union Bank (+5.7%) saw strong investor interest today.

Fundraising plans boost Indiamart Indiamart, the online B2B marketplace, aims to raise around ₹1,000 crore possibly via the qualified institutional placement (QIP) route. The exact quantum of funds raised will be revealed on 18 January, during the company’s board meeting. The company is likely to use the raised funds for potential acquisitions. The stock rose 2.7% today. The stock has been steadily rising of late, gaining nearly 26% in December and 28% in January, so far.

Tata Chemicals to buy Archean’s salt unit

• According to reports, Tata Chemicals is in talks to acquire Archean Group’s industrial salt division valued at ₹450 crore. The Chennai-based group is a manufacturer of industrial salt, industrial chemicals and fertilisers.
• Media reports suggest that the deal could materialise this month. Shares of Tata Chemicals rose 4.9% today. It has seen a strong run-up in Q3, gaining nearly 60%.

Closing bell

The markets have been rising for 10 weeks straight. Such an extended rise without any corrections is rarely seen and indicates the strength of the bulls. That said, it will be interesting to see the impact of the CPI inflation numbers, which will be announced today. The street expects the number to drop to 5.3% from 6.9% seen in November.

Falling vegetable prices (due to a better crop) are expected to curb overall inflation. Interestingly, at 5.3% the CPI will be comfortably below RBI’s upper tolerance level of 6%. Meanwhile, market expectations for the IIP reading (which will also be announced today) are not that encouraging. It is expected to drop to 1.1% versus 3.6% in November.

 

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Market Recap for 15 January 2020

Nifty 14,433 ▼ 161 (-1.1%)  Sensex 49,034 ▼ 549 (-1.1%)

After a dismal start, the markets picked up and closed in the green. Of the Nifty50 stocks, 26 saw gains today. Among the sectoral indices, the so-called defensives Nifty Pharma (+0.8%) and Nifty FMCG (+0.7%) were the top gainers, whereas Nifty Metal (-1.0%) and Nifty Media (-0.2%) receded the most.

Top gainers (Nifty50) Tata Motors ▲ 6.6% Bharti Airtel ▲ 3.9% UPL ▲ 2.6% Top losers (Nifty50) Tech Mahindra ▼ 3.9% HCL ▼ 3.7% Wipro ▼ 3.6%

Here are the top stories of the day. PVR gains despite Q3 losses For Q3, multiplex major PVR reported consolidated revenues of ₹320 crore versus last year’s figure of ₹924 crore. Its performance was impacted by the staggered re-opening of cinemas, which are allowed to run at just 50% capacity. The company suffered a net loss of ₹49 crore versus a net profit of ₹36 crore last year. However, the figure is better than the street's estimated loss of ₹213 crore. The company has successfully negotiated its rental and maintenance costs by 80% for the first nine months of FY21, citing challenges due to the pandemic. The stock gained 2.6% in an otherwise weak market.

IDFC First enters the credit card business While most banking stocks were reeling under selling pressure today, shares of IDFC First Bank gained 4.5%. The bank is entering the credit card business and will levy interest rates ranging between 9% and 36%, which is being seen as disruptive. Generally, credit card players levy interest in the range of 34-40% on an annualised basis. IDFC First Bank aims to onboard two lakh customers by March 2021. Meanwhile, shares of SBI Cards (-0.2%) were largely unaffected by the development.

Tata Steel Long surges on Q3 results Shares of Tata Steel Long Products were locked in the 20% upper circuit today. The speciality steel maker reported 36.5% YoY growth in its consolidated revenues for Q3. From a ₹112 crore loss in Q3 last year, it has turned around with a net profit of ₹304 crore due to high sales growth and better cost controls.

Gail announces buyback and interim dividend

• The state-owned gas distribution company will buy back 6.97 crore shares—2.5% of the total paid-up equity—at ₹150 per share, a 7.7% premium over today’s closing price.
• An interim dividend of ₹2.5 per share has also been announced alongside the buyback. The company has fixed 28 January as the record date for the buyback and dividend. Meanwhile, the stock declined 3.3% today.

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